Dalal Street up slightly after Monday’s massive losses

After a volatile trading session, stocks moved a tad higher on Dalal Street on Wednesday led by index heavyweights like Reliance Industries, ICICI Bank, among others.

The S&P BSE Sensex was up by 62 points or 0.18 per cent, closing at 35,697 while broader Nifty 50 index ended 2.5 points lower at 10,448.

The markets recovered slightly after the mayhem at the equity markets on Monday that witnessed the BSE Sensex closing 1942 points lower at 35,635 while the NSE Nifty settling at 10,451, down 538 points.

Gainers & Losers

Top gainers in the Sensex pack included Hero MotoCorp, RIL, and L&T, while IndusInd Bank, ONGC, State Bank of India and Infosys were among the under performers. Tata Steel, the top Sensex loser, slipped 7.69 per cent to Rs 297.50.

After the Reserve Bank of India placed YES Bank under moratorium and its founder Rana Kapoor was taken into custody by the Enforcement Directorate on March 8 , the bank’s shares zoomed as much as 30 per cent to Rs 28.75 

Nifty sectoral indices traded mixed today.

The Nifty PSU Bank was the top sectoral loser, down 3.86 per cent weighed by Bank of Baroda, Canara Bank, Punjab National Bank and Indian Bank. On the flip side, Nifty FMCG index edged higher driven by gains in Britannia, HUL, Marico and Dabur India.

RIL’s losses and gains

RIL surged around 6 per cent to Rs 1,152 apiece on the BSE after hitting a 52-week low of Rs 1,094.95 on Monday.

The share price of RIL saw the worst fall since October 2008 as crude oil prices dropped 31%  following Saudi Arabia starting an all-out oil war with the biggest cut in its prices in the last 30 years after a failure by OPEC+ to clinch a deal to cut production, owing to Russia’s opposition.

The impact of COVID-19 cases in India, which climbed to at least 60 as the virus spread to several cities,  and across the world also hammered investment sentiment around the large cap stock.

Drop in crude oil prices – Advantage India

However, we believe such a fall in crude oil price is positive for the country.

The maths is simple. Since India imports more than 80 per cent of its crude oil requirements,  a significant price change in crude oil has a direct effect on India’s current account deficit (CAD). As per Care Ratings, crude oil import bill during the financial year 2018-19 was around $112 billion and in the current fiscal, till January, it was $87.7 billion. Hence, if the oil prices remain low over an extended period of time, it will reduce India’s import bill and in turn, the current account deficit. 

 Historically, Indian equity markets have done well  whenever there was a crash in crude oil prices. But, with the Indian markets reeling under the twin pressures of coronavirus and Yes Bank scam, investors be warned that it could possibly be a sign of a looming global recession.

Meanwhile, crude oil recovered some losses, rising 9.4% to $37.59 per barrel on Tuesday amid reports that Russia remained open to further cooperation with OPEC to stabilise the oil market.

However, these big swings are likely to continue as long as the number of coronavirus cases accelerate. What remains to be seen is the coordinated response from governments and central banks to shore up the virus-weakened global economy.

Big Fat SBI Cards IPO

Meanwhile, if you have applied for one of the top most anticipated IPOs of 2020, the SBI Cards and Payment Services, which will be done either on Wednesday or Thursday, you can check the subscription status of the offer on the online portal of Link Intime India, the registrar to the IPO.

The shares of SBI Cards and Payments is expected to be listed on March 16, 2020.

The issue that received bids worth nearly Rs 2,00,000 crore has already tampered expectations of strong listing gains for the stock owing to the recent steep fall in the secondary market.