After early morning carnage of another 10% on benchmark indices, trading came to a standstill. Nonetheless, soon after opening the market recovered by a sharp quantum, which is the biggest ever intra-day recovery.

A couple of moves have lifted sentiments:

1. Recovery in US Stock Futures:

The sharp gains on the Indian indices after the market resumed trade post circuit filter halt is attributed to gains on the Dow Futures of as much as 500 points. Earlier Dow Futures for March delivery were trading lower by 700 points. So, investors concerns have been allayed to an extent.

Nonetheless, Asian markets are still trading lower with Nikkei still down by over 6%.

2. RBI Intervention To Support Markets:

After the currency touched a low of 74.48 per dollar on Thursday, RBI intervened to infuse liquidity through foreign exchange sell or buy swap. And now given the huge FII outflows from G-securities, the central bank will conduct Rs. 25000 crore, 7-day variable rate auction and Rs. 3.8 lakh crore, 14-day variable rate reverse repo auction today. And the variable rate will help counterbalance FX sell/buy swap effect.

Also, at the same time, the RBI’s note to state government’s assuring them of safety of deposits with private sector banks also lifted Nifty Bank.

3. CEA Comments on Measures To Calm Markets:

Given the carnage seen in last few days, the Indian government as well as the finance ministry will take measures as necessary for calming markets which are gripped by coronavirus pandemic, said the government’s chief economic adviser Krishnamurthy Subramanian on Friday.

“Government and regulator will be responding when it will be necessary,” Subramanian told reporters when asked about government’s plan on stabilizing the current rout in stock and currency markets.

4. Continuous Decline on Crude:

With an overnight decline of another 8% on crude, the commodity is set to hit its worst week since 1991. And crude oil prices declining augur well for the Indian financials as India imports major portion of its oil requirement. As per estimates for decline of $5 per barrel in oil prices, India will have savings of $7-8 billion.

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