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Indian markets may be under pressure, Vodafone Idea, Bharti Airtel in focus

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Mumbai: Indian stock markets may be wobbly at the start of the week on Monday, taking cues from global peers which were under pressure. Asian shares stepped back from three-week highs on Monday as investors weighed the near-term hit on global growth from a fast-spreading coronavirus outbreak in China, although expectations of further policy stimulus helped stem losses.

Trading is expected to be light as US stocks and bond markets will be shut on Monday for a public holiday.

MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.1% to 555.50, easing further from last week’s top of 558.30, which was the highest since late January.

Australian shares and South Korea’s index were each down 0.3%. Japan’s Nikkei fell more than 1% after data showed the country’s economy contracted at an annualised pace of 6.3% in October-December, shrinking the fastest since the second quarter of 2014.

The hit to the world’s third-largest economy comes amid fresh concerns about weakness in the current quarter, as the coronavirus damages output and tourism, stoking fears Japan may be on the cusp of a recession. Worryingly, Singapore downgraded its 2020 economic growth forecast due to the coronavirus outbreak, while China’s economy is also widely expected to take a sharp hit.

Within China’s Hubei province – the epicentre of the coronavirus epidemic – authorities reported 1,933 new cases on Monday, about 5% higher than previous day.

Nationwide figures, due later in the day, are also expected to show an increase from the 2,009 cases last reported.

To help cushion the jolt from the epidemic, China’s Finance Minister announced plans on Sunday to roll out targeted and phased tax and fee cuts to help relieve difficulties for businesses.

Asia’s woes have yet to spread elsewhere, with Wall Street indices scaling record highs.

Back home, the Indian affiliate of Deloitte Haskins and Sells on Sunday said the auditor and its network firms in the country will no longer offer non-audit services to “public interest entities” they audit in India, three days after Price Waterhouse India made a similar announcement.

Vodafone Idea Ltd will dip into its modest reserves and tap short-term loans to pay part of the 44,000 crore it owes the government in licence fee and spectrum usage charge dues, two people aware of internal discussions said, after the telecom operator’s promoters declined to infuse more capital into the company. The Supreme Court’s 14 February order directing telcos to pay up more than 1 trillion by 17 March hits Vodafone Idea the most, given that it only had 12,530 crore of cash and equivalent reserves as of December 2019, while a gross debt of 1.2 trillion.

The government’s 2.1 lakh crore sell-off target is achievable with half of the amount expected to be met through the spill-over deals of Air India, BPCL and Concor and the remaining 90,000 crore through a 6-7% stake dilution in state life insurer Life Insurance Corporation of India, Chief Economic Advisor K.V. Subramanian has said amid doubts over achieving the huge amount when the current fiscal disinvestment revenue target was lowered by 40%.

Meanwhile, action was relatively muted in currency markets, with the dollar flat against the yen at 109.74. It was unchanged on the pound at $1.3049 and a tad weaker on the euro at $1.0837.

The risk-sensitive Aussie, which is also played as a liquid proxy for the Chinese yuan, was also barely moved at $0.6716. That left the dollar index at 99.093.

In commodities, gold inched slightly lower to $1,583.15 an ounce.

Oil futures were mixed with Brent crude down 8 cents at $57.24 and US crude up 4 cents at $52.09.

(Reuters contributed to the story)

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