Ever since the Indian economy strives to recover from a slowdown, the Coronavirus outbreak has further hit the possibility of revival given the negative impact on the various sectors of the economy. As the economy battles a new scare, stock markets are witnessing fresh negatively impacting investors. With the cases of Coronavirus getting detected in India, the market is expected to further go down.
Here we are talking about the impact of Coronavirus on the domestic economy, industry, stock and currency market.
Economy
After the GDP growth rate fell to a 7-year low to 4.7 per cent in Q3FY20, owing to a fall in manufacturing, Coronavirus scare is emerging as another challenge staring in the Indian economy’s face.
Quote:
“We believe a weaker China and global growth, and disruptions along the supply chain (China share in India’s goods imports was 14% in CY19) (Figure 10) are likely to have some adverse impact on India’s growth in the Mar-20 quarter. For instance, sectors such as electronics, pharma, automobiles, etc, could see supply disruptions in the value chain”, –– Tanvee Gupta Jain, Economist, UBS Securities India.
Industry
The Finance Minister Nirmala Sitharaman recently said that the government may soon announce measures to help industry limit Coronavirus hit, the pharma and automobile industries are already seeing the impact.
Pharmaceuticals: Given the pharmaceutical industry’s deep linkages to China, the supply chain of raw materials of drugs has taken a hit. The production facilities in Himachal Pradesh, the largest pharma hub of Asia, have warned of suspension, according to a report in The Indian Express. The price of paracetamol has almost doubled since January 2020. APIs also called bulk drugs, are significant ingredients in the manufacture of drugs. The Hubei province of China, the epicentre of the coronavirus, is the hub of the API manufacturing industry.
Automobile industry: The auto industry is facing the heat as supply chains get disrupted. China is one of the leading suppliers of auto components in India, accounting for 27 per cent of the total exports.
Quote:
“The disruption caused by coronavirus has hit the automotive industry and thus also affected the automotive component and forging industries,” All India Financial Institutions (AIFI).
Stock market
The stock markets across the world have remained highly volatile in the last many days. In India, the 30-share BSE barometer on previous month closed 153.27 points or 0.40 per cent lower at 38,144.02, and the broader Nifty closed lower by 69 points or 0.62 per cent at 11,132.75. The Sensex has fallen nearly 1300 points from highs. The long term charts like weekly/monthly time frame indicate that 11,000-10900 is going to be a strong support zone for the market and there is a possibility of a bottom formation around these areas in the next few sessions.
Currency
Not only local, but global investors and traders would find it worth their time to consider positions in USDINR contracts as a standalone hedge asset class as a response to COVID-19 during these trying times in the global markets.
All About Coronavirus
Coronaviruses (CoV) are a large family of viruses that cause illness ranging from the common cold to more severe diseases. Coronavirus is a new strain that has not been previously identified in humans. Coronaviruses are transmitted between animals and people.
Symptoms
Common signs of infection include respiratory symptoms, fever, cough, shortness of breath and breathing difficulties. In more severe cases, the infection can cause pneumonia, severe acute respiratory syndrome, kidney failure and even death.
Precautionary Measures
Standard recommendations to prevent infection spread include regular hand washing, covering mouth and nose when coughing and sneezing, thoroughly cooking meat and eggs. Avoid close contact with anyone showing symptoms of respiratory illness such as coughing and sneezing.
