As the fallout from the fast-spreading novel coronavirus widened, the US Federal Reserve on Tuesday cut interest rates by a half percentage point in an emergency move to try to prevent a global recession. The World Bank also announced $12 billion to help countries fight the coronavirus.
The virus, meanwhile, continues to spread quickly beyond the outbreak’s epicenter in China, with Italy overnight reporting a jump in deaths to a total of 79. There are almost 91,000 cases globally. China’s death toll was 2,946, with more than 166 fatalities elsewhere. The WHO chief yesterday said that about 3.4 per cent of confirmed cases of COVID-19 have died, but the virus can be contained.
Despite the Fed’s attempt to stem the economic fallout from the coronavirus, US stock indexes closed down about 3 per cent on Tuesday as investors questioned whether the rate cut will be enough if the virus continues to spread.
The Dow Jones industrial average, Nasdaq composite and S&P 500 each closed down close to 3 per cent.
The Reserve Bank of India has already said that it is monitoring global and domestic developments closely and that it is ready to take necessary action to ensure the orderly functioning of financial markets.
Apart from the coronavirus newsflow, investors will await the release of India Service PMI numbers for February to be released today.
They will also track stock-specific action, the Rupee's trajectory and oil price movement. The rupee slumped 43 paise yesterday to close at a 16-month low of 73.19 against the US dollar.
Asian shares started lower on Wednesday after an emergency rate cut from the US Fed was unable to quell investor fears over the coronavirus’s widening fallout. In Asia, Australia’s ASX 200 index fell 1.4 per cent in early trade. Nikkei futures traded in negative territory
In commodities, oil prices slipped, with Brent crude falling 30 cents to $51.90 per barrel.
Back home, benchmark indices snapped a seven-day losing streak on Tuesday. Sensex rose 480 points to end at 38,624 while Nifty jumped 171 points to close at 11,303. According to analysts, the Nifty is all set to give a pullback rally after the sharp cut. Traders can go long with 11,050 as stop-loss while resistance zone is seen at 11433-11536.
And, in the end, here's a stock idea by HDFC Securities which recommends buying Indraprastha Gas Limited around Rs 442-446 for the target of Rs 470 with stop-loss at Rs 432.Read by: Kanishka