Stocks started the day strong with the Sensex and the Nifty gaining close to 5% in the initial minutes of trading.
The rally, however, was short-lived as sellers overwhelmed the market soon pushing the indices into the red.
Meanwhile, the economic impact of the coronavirus pandemic is starting to show as governments across the world struggle to prop up their economies.
Join us as we cover the top business stories through the day.
Fuel demand hit by lockdown
The lockdown of cities and states across the country has hit fuel demand and forced public sector refiners to cut down production. This cannot be good news for the government that relies on fuel taxes to fund expenditure.
Reuters reports: "India state refiners are cutting crude processing as local fuel demand is hit by lockdowns in most parts of the country to prevent spread of coronavirus, industry and company officials said.
Top refiner Indian Oil Corp has cut refinery runs by an average 15%-20%, sources familiar with the matter said.
“About 65% of the crude is used to produce jet fuel, petrol and diesel ...demand for these products is very low,” said one of the sources."
Earlier, the government amended a law to increase taxes on domestic fuels.
Retailers body urges State governments to keep all forms of grocery stores open during lockdown
The Retailers Association of India (RAI) has requested State administrations to allow food and grocery stores of all formats, irrespective of their locations, to stay open during the lockdown period.
The request comes after some unfortunate incidents in Maharashtra, Andhra Pradesh, Uttar Pradesh, Punjab and Gujarat where the police beat up employees and delivery staff of retailers and dragged them to police stations.
The association has also requested home deliveries be allowed to prevent people from stepping out; thus, help prevent the spreading of virus infection.
Stocks end volatile day with significant gains
The benchmark indices ended the day up 2.5% following yesterday's humongous crash.
It was a volatile day of trading today with stocks opening up close to 5% before giving back all gains. There was a rally in the afternoon session that helped claw back some of the lost gains.
The Nifty ended the day at around the 7,800 mark, well below the 8,000 level that is likely to offer some resistance. The Sensex meanwhile gained close to 700 points.
Meanwhile, European markets will be opening to some bad news.
Finance Minister announces financial relief measures
Highlights from the Finance Minister Nirmala Sitharaman's ongoing address to the media:
* Very close to coming out with economic package to deal with coronavirus crisis
* Last date for filing income tax return for FY 2018-19 extended to June 30
* Interest rate for delayed payment cut to 9% from 12%
* Last date for filing March, April, May 2020 GST returns extended to June 30
* For companies with less than Rs 5 crore turnover, no interest, penalty and late fee to be charged on late GST return filing
* For companies with turnover of over Rs 5 crore, no late fee and penalty will be charged on late GST return filing; interest rate reduced to 9%
* Vivad se Vishwas scheme extended to June 30, no 10% additional charge on paying principal amount involved in tax dispute
* Aadhaar-Pan linking date extended to June 30 from March 31
* Threshold of default extended to Rs 1 crore from existing Rs 1 lakh now to prevent insolvency proceedings against MSMEs
* If situation continues beyond April, govt to consider suspending Sections of IBC for 6 months to stop cos being forced into insolvency
* Requirement of mandatory holding of board meetings for companies extended by 60 days
* Free of charge cash withdrawal from any other bank ATM allowed for debit card holders for 3 months
* Complete waiver of minimum balance charges for savings bank account
* Regulators, Finance Ministry monitoring developments, volatility in stock markets; monitoring happening thrice a day
Stock market update: Stocks jump back up to reclaim gains
The benchmark stock indices are up 4% at the moment, reclaiming a significant share of the gains lost in the morning.
The Sensex has gained over 1,000 points while the Nifty is trading around 7,900. The Nifty is expected to face some resistance around the 8,000 region.
Meanwhile, Bloomberg has an important story on the lack of trades in the Indian bond market this morning during the opening minutes.
Industry bodies hope for government help to handle crisis
As the government prepares its stimulus plan to tackle the economic effects of the coronavirus pandemic, the demand for state help keeps getting louder.
Reuters reports: "India's small and mid-sized enterprises (SMEs) will struggle for survival if the government does not follow international counterparts in offering financial support to those acutely impacted by the coronavirus outbreak, industry bodies said.
Labour-intensive SMES, which employ over a 100 million of India's urban population, “need immediate fiscal relief and credit flow to keep their work force and essential plant and machinery running,” said Ravi Sehgal, head of the Engineering Export Promotion Council of India - a trade body with 13,000 member firms of which 60% are SMEs, making it one of India's biggest SME voices.
“India being the fifth-largest economy in the world cannot be found lagging far behind in taking due rectifying action,” said Niranjan Hiranandani, head of ASSOCHAM, an umbrella organisation representing over 250 chambers of commerce and trade associations and indirectly 450,000 member companies.
India needs monetary and fiscal stimulus “to protect businesses from going bankrupt,” he said."
Finance Minister to address media at 2 PM
Japan's central bank loses billions on ETFs, may face annual loss
The Bank of Japan, which has been directly buying stock ETFs to inject fresh liquidity into the economy for quite some time now, is set to face losses after this month's market rout.
Rueters offers the details: "The Bank of Japan on Tuesday acknowledged unrealised losses of 2-3 trillion yen ($18-$27 billion) on its holdings of exchange-traded funds (ETFs) after a rout in Japanese stock prices, raising the prospect it could post an annual loss this year.
Analysts said a loss - highly unusual for a central bank - would be the first by the BOJ in nearly 40 years and could constrain the bank's attempts to prop up market sentiment with continued aggressive stock purchases.
The financial health of the BOJ, whose fiscal year ends next Tuesday, is increasingly tied to Japanese stock prices after the central bank, which already holds almost 30 trillion yen ($272 billion) of ETFs, doubled down on purchases this month.
If the share market falls further, a hardly unrealistic scenario given the impact of COVID-19 pandemic, the central bank could run out of all its reserves and even become insolvent on paper, some analysts say."
Aviation stocks drop further after travel ban
The free-fall in airline stocks shows no signs of abating as domestic and international travel have come to a virtual standstill.
PTI reports: "Aviation stocks on Tuesday dropped up to 10 per cent after the announcement of suspension of all domestic operations of Indian airlines from March 25 amid Covid-19 pandemic.
Shares of IndiGo’s parent InterGlobe Aviation tanked 9.99 per cent to Rs 765.05 — their one-year low on the BSE.
SpiceJet also dropped 4.92 per cent to Rs 31.85 - its 52-week low as well as lower circuit.
Airlines will suspend all domestic operations from March 25 amid the outbreak of coronavirus (Covid-19), the Aviation Ministry announced on Monday.
The country has already suspended international flights."
Bond market sees no trade in first 20 minutes
Gold could benefit from inflation fueled by virus response, says Goldman Sachs
Gold, a traditional safe haven asset, has failed to rally despite the economic uncertainty over the last few weeks. That might be about to change according to research coming from Goldman Sachs.
Reuters reports: "Goldman Sachs said on Tuesday inationary concerns triggered by the central bank policy response to the coronavirus outbreak should underpin gold prices this year as the “currency of last resort.”
“Combined with the fiscal nature of the current policy response to COVID-19, we believe physical inflationary concerns with the dollar starting near an all-time high will for once dominate financial asset inflation that was a feature of the past decade,” the Wall Street bank said in a note dated March 23.
The announcement from the Fed for 'open ended' quantitative easing offsets the negative impact to emerging markets wealth, Goldman Sachs said."
Experts urge corporates to avoid pay cuts and layoffs to expedite recovery
Corporations looking to cut costs to survive the current economic downturn are getting some counter-intuitive advice from some quarters.
Edited excerpts from PTI : "Experts are of the view that it is the time for India Inc to send across a long-lasting message and it is their duty to provide a sense of security to their workforce by retaining their existing staff members and that can be achieved as any fresh hiring is anyway unlikely to happen at the time.
There are several areas where expenses can be cut to ensure that staff costs are left untouched, experts said, while listing publicity budget among the “most unnecessary” expense heads in the current scenario. Besides, travel, hiring and training costs have as such gone down, they said.
Several business consultants and HR experts said companies need to be careful when it comes to rationalising expenses as job and pay cuts would further aggravate the problem by delaying the recovery."
Australia passes "most significant" economic support package
Talking about governments grappling with the economic cost of the coronavirus pandemic, here's the Australian government's most-recent stimulus package.
Some of the details from IANS : "Under the stimulus measures, eligible small and medium sized businesses, and not-for-profits (including charities) that employ people, will receive payments of up to A$100,000 in an attempt to prevent losses.
They also agreed to set aside an extra A$40 billion dollars for urgent unforeseen spending regarding the pandemic."
Global economy to contract 1.5% in 2020 due to the coronavirus pandemic
Estimates regarding the growth impact of the coronavirus pandemic are beginning to come in slowly. Here's one from a Washington-based thinktank.
IANS reports: "The global economy was expected to contract 1.5 per cent in 2020 amid the coronavirus pandemic, according to the Washington-based Institute of International Finance (IIF).
The IIF is a global association of the financial industry with over 450 members from more than 70 countries and regions, reports Xinhua news agency.
“We cut our global growth forecast from 2.6 to 0.4 per cent in the last two weeks, but the building COVID—19 pandemic, the OPEC price war and mounting credit stress in advanced and emerging markets continue to reshape the picture in fundamental ways,” the IIF said in a report published on Monday.
“Our global growth forecast now stands at -1.5 per cent, with a contraction of 3.3 per cent across mature markets and growth of only 1.1 per cent,” in emerging markets, the report said, adding that there was “huge uncertainty” about the economic impact of COVID-19."
Stock market update: Stocks trade in the red after losing all initial gains
Ashish Rukhaiyar reports from Mumbai:
Equity benchmarks opened on a strong note on Tuesday--a day after registering their worst single-day fall--but failed to maintain the gains as the underlying weakness in investor sentiments again led to selling in most stocks.
The 30-share Sensex, which gained nearly 1,500 points to touch a high of 27,463 in the first few minutes of the session, dipped into the red to trade at 25,843.39, down a marginal 138 points at 10:07 AM. The Nifty was at 7,570.55, down 39.70 points.
The India VIX jumped over 15% to touch a record 82.91. On BSE, more than 1,000 sticks were in the red, as against around 500 gainers. In the Sensex pack, 18 stocks were in the red.
Stocks fail to bounce back
The benchmark stock indices had a strong opening this morning but lost most gains within minutes.
The Sensex and the Nifty were up close to 5% this morning after yesterday's heavy losses but lost most of their gains to trade with gains of around 1%.
It is worth noting that stocks have witnessed strong intermittent rallies since the time they started crashing earlier this month. Investors, however, have continued to sell into these rallies.
Meanwhile, the rupee has shown some strength.
PTI reports: "The Indian rupee witnessed marginal recovery in early trade and appreciated by 18 paise to 76.02 against the US dollar on Tuesday tracking positive opening in domestic equities.
At the interbank foreign exchange the rupee opened at 76.02, registering a rise of 18 paise over its previous close.
On Monday, rupee had settled at 76.20 against the greenback."
Coronavirus lockdown affects delivery of essential goods
The lockdown of cities and states across the country has affected the free movement of many essential goods, say e-commerce players. This could further depress economic activity.
PTI reports: "With lockdowns being imposed in various parts of the country to contain the spread of coronavirus, e-commerce players, including Amazon India, on Monday faced disruption in the delivery of even essential products to their customers.
Online retailers pointed out that their delivery staff is being stopped by local police and urged authorities to streamline the movement of delivery agents and goods.
Industry watchers said there is an urgent need to clarify the kind of products that are allowed to be delivered by ecommerce companies.
Further, they said there is a need for uniform classification of essential items across various states and that instructions need to flow down clearly to the last mile, where the delivery agents are facing issues."
Stocks set to bounce back after worst fall in history
In the pre-open minutes, the Nifty was up around 3% while the Sensex gained 4% as investor sentiment improved after yesterday's historic fall.
Yesterday, the Sensex witnessed its worst fall in history, crashing over 13% over the nation-wide economic shutdown to control the spread of the coronavirus pandemic.
