Mumbai: Indian stock markets are expected to trade firm on Wednesday tracking gains in global peers. Domestic investors will shift their focus to the Reserve Bank of India's monetary policy review statement, due on Thursday. The market widely expects the central bank to hold key interest rates steady.
Asian stocks steadied on Wednesday on hope of additional Chinese stimulus to lessen the economic impact of the coronavirus outbreak, but risks remain as the illness continues to spread, with death toll nearing 500.
The MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.3%. Australian shares advanced 0.6%, while Japan’s Nikkei stock index rose 1.2%.
The safe-haven yen and Swiss franc nursed losses versus the dollar while the yuan held on to gains in offshore trade in a tentative sign of improvement in risk appetite as investors monitor the impact of the virus.
Oil prices, however, remained weak on concerns over the long-term dent in demand for energy and other commodities despite hopes for more output cuts from the Organization of Petroleum Exporting Countries (OPEC) and its allies.
China and other countries have imposed travel restrictions to try to contain the spread of the new virus that emerged in the central Chinese city of Wuhan late last year, slamming the breaks on manufacturing and tourism in the world’s second-largest economy.
Many investors argue that any slowdown will be temporary and that Chinese policy steps are reason to remain optimistic about the growth outlook, but so far public health officials have not found a way to stop the spread of the virus both inside and outside of China.
US stock futures fell 0.2% in Asia on Wednesday. The S&P 500 had risen 1.5% on Tuesday and the tech-heavy Nasdaq rose to a record high.
The People’s Bank of China (PBOC) is likely to lower its key lending rate - the loan prime rate - on 20 February, and cut banks’ reserve requirement ratios in the coming weeks. The PBOC has already pumped hundreds of billions of dollars into the financial system this week. This helped Chinese stocks stabilize on Tuesday following a rout that wiped out around $700 billion in market capitalization on Monday when Chinese markets opened after an extended holiday.
The virus has already claimed nearly 500 lives. Japan’s health minister said on Wednesday 10 people on a cruise ship at the port of Yokohama have tested positive for the new virus.
Back home, the Indian government has proposed to amend the Customs Act to give it wider powers to ban imports and exports of goods that may hurt the domestic economy, clearing the way for it to bar imports of cheap toys and firecrackers from China. So far, the government had powers to only ban imports and exports of gold and silver under the Customs Act, 1962. Once approved, the amendment, through the Finance Bill, will expand the government’s power to ban imports or exports of all goods.
The government on Tuesday clarified that a budget proposal for deduction of 10% tax at source while making dividend payments above ₹5,000 a year to shareholders or mutual unit holders will not apply to any capital gains on redemption of mutual fund units.
Bharti Airtel Ltd reported a loss of ₹1,035 crore, its third quarterly loss in 14 years, as the company set aside funds to pay dues to the government and comply with a Supreme Court verdict. The Delhi-based telecom operator swung to a ₹1,035 crore loss in the quarter ended 31 December from a profit of ₹86 crore in the year earlier, it said in a statement on Tuesday. Consolidated revenue from operations rose 8.5% to ₹21,947 crore.
In the currency market, the yen traded at 109.46 per dollar, close to the lowest in almost a week. The Swiss franc held steady at 0.9635 versus the dollar following a 0.3% decline on Tuesday. In the offshore market, the yuan traded at 6.9898 per dollar after rising on Tuesday for the first time in five trading sessions.
The benchmark 10-year Treasury yields extended gains in Asia, rising to 1.6043% in another sign of receding concern about the coronavirus.
US crude ticked up 0.12% to $49.67 a barrel in Asia but remained below the psychologically important $50 a barrel mark. US oil futures have lost nearly 15% since China confirmed on 21 January that human-to-human transmission of the previously unknown virus is possible, which kicked of a rout in global markets as the number of cases and the death toll rose.
(Reuters contributed to the story)