All eyes will be on the OPEC meeting at Vienna in the latter part of the week. The meeting assumes importance due to the sharp fall in crude oil prices. Brent Crude has fallen from $69/bbl to $50/bbl in a span of last 3 months as fears of a global slowdown and the Chinese Coronavirus have taken its toll on the price of crude. OPEC has been waiting for Russia’s confirmation on deeper supply cuts but Russian Oil Minister, Novak, has not been largely non-committal. It is now estimated that the OPEC may go ahead with much deeper supply cuts in this meeting, even if Russia chooses to stay out.
SBI Cards IPO will open on March 02nd and will remain till March 05th. The IPO comes at a time when the global markets have been in the midst of tumult. However, SBI Cards managed to find a lot of interested buyers for its shares among the anchor investors and its Rs.2800 anchor issue actually got substantially higher interest. Considering the strong brand value of SBI and the strong QIB support, most retail investors and HNIs are likely to be interested in the SBI Cards IPO irrespective of the state of the market. However, the BRLMs are taking no chances and are already laying out aggressive sales thrust.
FPIs infused Rs.6554 crore into Indian markets in the month of February but this may be masking the aggressive sell-off in the last 7 trading sessions of the month. FPIs pumped in Rs.1820 crore into equities and Rs.4734 into debt. The overall net inflow stood at close to Rs.26,000 crore in the first fortnight of February which means traders foreign investors have pulled out nearly 17,500 crore in the last few trading sessions from equity and debt put together in the midst of the Chinese Coronavirus scare. Most global investors have adopted a risk-off attitude and have been shifting out of equities across the board.
The last week of February was a week of huge losses as the top 10 companies lost close to Rs.3,35,000 crore in market capitalization. Needles to say, it was the Chinese virus that took its toll on hydrocarbons, metals, autos and pharma stocks. Reliance Industries saw market cap depletion of close to Rs.1 trillion during the week while TCS and HDFC contributed another Rs.92,000 crore to the market cap depletion. Hardly any of the heavyweights were spared during the week with Bharti Airtel relatively better off losing just Rs.11,700 crore during the week. Sensex and Nifty lost close to 7% during the week.
India, the world’s second largest crude steel producer after China, has seen its steel output shrink by 3.2% to 9.288 million tonnes (MT) for the month of January. During the same month, China recorded an increase of 7.2% to 84.3 MT. The other major producer, Japan, saw its steel output for January fall by 1.3% to 8.20 MT. Just a couple of years back, India had overtaken Japan to become the second largest steel producer in the world. Out of the total global crude steel production of 154 MT, China alone accounts for 55% of the output. The other major steel producer, South Korea, has also seen its steel production shrink by 8.2%. Compression in steel production in India is due to raw material shortages as well as due to the competition of cheaper steel from China, Japan, South Korea and Russia.
Mahindra and Mahindra saw a 42% fall in domestic market sales for the month of February at just 52,915 units. For the month of February, M&M’s passenger vehicle sales were down 58% at just 10,938 vehicles. This segment includes utility vehicles, cars and vans. Even the sales in the commercial vehicles segment saw a sharp 25% fall to just 15,856 units in the month. While exports are a very small percentage of the overall sales of M&M, that was also down by 42% in February. M&M has largely taken a hit on account of the China virus, which has disrupted most of its raw material supply chains.
