Shibani Sircar Kurian, Sr. Vice President and Head of Equity Research, Kotak Mahindra Asset Management Company said, ''Global markets felt the impact of the spread of the coronavirus and the Indian equity markets were not immune to the trend. Markets the world over, are grappling with the uncertainty of the impact of this epidemic on growth and global demand. The rapid spread of the deadly virus outside the epicenter i.e. China has caused further panic. The widening scope of the health crisis threatens to overwhelm global supply chains. In addition, the outbreak could impact consumer demand, as people limit travel or stay home even without a government order to do so. While India has supply chain linkages to China, the impact has so far been limited given the existing inventory in the system. However, a prolonged shut down of factories in China and the spread of the virus to other countries would have an impact on India as well.
The expiry of the futures & options (F&O) contracts for the February series on Thursday, too added volatility in the domestic market. Global markets witnessed turmoil with S&P Dow Jones down 7% and S&P 500 down 10.7% in just last four trading days (data till Feb 27, 2020). The impact of the coronavirus was seen in global commodity prices as well. Oil prices fell for six straight sessions owing to weaker demand from China. Investors globally were seeking some flight to safety which is evidenced from rise in gold prices.
From here on, domestic equity markets will focus on Q3FY20 GDP growth data release, impact of disruption in supply chain for Indian companies, any further spread of coronavirus outside the epicenter and the reaction of policy makers around the world.''