Index trend and stocks in action on March 23, 2020

As the saying goes, the comeback is always stronger than the setback. Nifty made a strong comeback on the last trading session of the week as it sky-rocketed 5.83 per cent to close at 8,745. But, on the weekly basis, Nifty slipped over 12 per cent, which was the worst weekly performance since 2008, owing to the escalation of Coronavirus cases in India, impacting the overall economy. 

SEBI has been proactive with two major announcements made on March 19 & 20, as the announced listed-companies to defer the disclosure of Q4 and annual earnings by 45 days to June 30 and second, announcement was a measure to make short-selling of stocks difficult, in order to curb the market volatility caused by the outbreak of the virus crisis.

Before discussing future direction of the market, we will try to elaborate some positive outcomes of Friday’s decent pullback. For the first time in last three week’s declining phase, Nifty has formed a higher high and higher low on a closing basis, indicating a fading downward momentum.  But, in a confirmed bear market, this kind of pullbacks is short-lived. If we look at the 60-minute chart, Nifty exactly closed at downward channel resistance. Even though it registered the biggest single day recovery, it also recorded a highest weekly fall after 2008 financial crisis. The magnitude of the fall is more severe than 2008 crisis.

As we discussed in our previous write-ups, we have entered in to a category-3 correction with no doubt. In the past, these category corrections extended up to 50 to 64 per cent from the top. Currently, Nifty corrected 36.99 per cent. Friday’s bounce came from December 2016, swing low support. Nifty is well below Jan 2017 breakout level. The current fall is the biggest in a quarter in Indian stock market history.

Going ahead, if Nifty closes above Friday’s high of 8,883, the targets are open towards 9,589 and 10,131, which are 38.2 and 50 per cent retracement levels of the recent fall. This is the only hope based on Friday’s close. But if Nifty closes below 8,350, it will retest the prior low and can go below as well. The support zone is around 7,340-6,825 levels.

Escorts: Escorts Ltd & Kubota Corporation further deepens their existing relationship. Kubota Corporation is set to invest in Escorts Limited. Escorts will issue and allot 1.22 crore equity shares through a preferential issue to Kubota, at an issue price of Rs 850 per equity share, subject to approvals from regulators and shareholders. Also, Escorts has informed the Exchange that District Magistrate of Faridabad has issued a notification for the closure of all offices and production facilities based out of Faridabad district to control the community transmission stage of Covid-19 disease.

Whirlpool of India: Whirlpool of India Ltd to suspend manufacturing operations at its Faridabad and Pune units with immediate effect till March 31.

Lupin: Lupin launches Betamethasone Dipropionate ointment USP (augmented).

Eicher Motors: In light of the unprecedented situation, owing to the spread of COVID-19, Royal Enfield has decided to suspend all operations globally, starting Monday, March 23, 2020 till March 31, 2020.

Titan: The company has decided to close down all its manufacturing units in all businesses across the country for one week, starting March 23, 2020. The situation will be evaluated at the end of this week to decide the further course of action.

IPCA Laboratories: USFDA makes an exception to IPCA labs' import alert due to Covid-19 outbreak and the shortage of certain drugs as well as finished products. Exceptions are for the company's Hydroxychloroquine (HCQs) and Chloroquine Phosphate APIs produced at the company's API manufacturing unit in Ratlam, along with HCQ tablets produced at its manufacturing units in Indore, Pithampur and Silvassa.

Hero Motocorp: Hero MotoCorp has decided to halt operations at all its global manufacturing facilities, including in India, Colombia and Bangladesh as well as Global Parts Centre (GPC) at Neemrana with immediate effect until March 31, 2020.