Domestic, global cues negative for market

The market may see more selling pressure when it opens on Monday, factoring in the likely impact of an extended shutdown on the economy. Marketmen have now started speculating about an extended shutdown, as the number of new coronavirus cases has started rising.

The global cues so far are negative with the US market benchmark Dow Jones Industrial Average closing 4.06 per cent down on Friday.

Though coronavirus cases in India are still low compared to the European countries and the US, but the largescale migration of daily wage earners to their homes from big cities posed risks of rapid contagion.

Though the government and the Reserve Bank have announced huge financial packages, analysts said given the size of problem, the scale of the 'stimulus' is small.

Also global situation has turned out to be much worse than expected, with over 30,000 dead and close to 7 lakh people affected.

Analysts from Emkay Global Financial Services said, "Based on our estimates, the lockdown of the nature we are going through should shave off Rs 2.3 trillion from GDP every week it is continued. Although the government's Rs1.7 trillion package (0.83 per cent of GDP) addresses some of the most basic issues, it pales in comparison with both the scale of the problem and what is being done by other countries…

"We believe the RBI's measures may somewhat ease the pain on the economy at the loss of lenders, but will require further economic boosters from the government, and above all needs to contain the virus outbreak to tide over the current financial crisis in mediumlong-run."

Japanese investment banking firm Nomura said, "We expect coordinated fiscal and monetary easing to continue. We believe the next tranche of fiscal measures will address cashflow challenges faced by SMEs and other hard-hit industries."

"Even though policy responses are being stepped up, we believe they are unlikely to prevent the economy from contracting due to the twin shocks of the Covid-19 outbreak amid a weak financial sector," Nomura said.