Markets faced pressure through the trading session on January 6 across segments amidst news of cases of the HMPV virus (Human Metapneumovirus) being discovered in India. But market experts suggest that currently there are no big concerns for the markets and today's market movements are influenced more by banking sector concerns and global economic factors than news of the virus. Both benchmark indices fell by around 1 percent each while sectoral indices also were trading in the red through the day. At close, Nifty 50 was trading at 23,616.50, around 1.6 percent lower and Sensex was down 1.6 percent at 77,946.
Over the last few days, it has been reported that two cases of the HMPV virus have been detected in Karnataka. The Union Ministry for Health, in a statement, said that the situation is being "closely monitored" through all available channels and it has requested the World Health Organisation (WHO) to share timely updates regarding the situation. They have added that they will continue to monitor the situation closely and validate information and developments accordingly. According to the press release discussing the key takeaways from the meeting, the situation in China is “not unusual” given the ongoing flu season.
Sunny Agrawal, Head of Fundamental Research at SBI Securities suggests that currently for markets, the Health Ministry statement has helped ease concerns. "The Health Ministry has stated that HMPV is not comparable to COVID-19. There’s no indication of travel restrictions or lockdowns, so there’s nothing to worry about on that front," he said.
Today's market downward trend according to experts could have various other contributing factors. Siddarth Bhamre, Head of Research at Asit C. Mehta adds, "The market is reacting to disappointing banking business numbers. PSU banks are down significantly, HDFC Bank is down by 2 percent. That’s why the market is down," he explained. The Nifty PSU Bank Index was down by around 4 percent and Nifty Bank Index was down by around 2 percent.
Agrawal adds that there are multiple factors at play. "One reason could be the weakening rupee, which is linked to the strengthening of the US dollar index. Banks have also reported muted growth during the December quarter, and as a result, most banks are under selling pressure today. This is dragging down the overall market," he said adding that it’s not so much about any major panic around a specific issue. "That might play a small part, but it’s not the main driver. Overall, it’s a culmination of multiple factors playing out today," he said.
Narendra Solanki, Head Fundamental Research-Investment Services at Anand Rathi Shares and Stock Brokers too pointed out that the virus is not being seen as a significant threat. "The clarifications we’ve received suggest there’s no major concern. It’s not highly contagious or alarming. Instead, global factors like weak banking updates and rumours of rate cuts by other Central Banks are playing a larger role in today’s market activity," he said.
Bhamre notes that if the market reaction was a result of the virus, some other specific impacts would have been seen. He cites the example of diagnostic companies like Metropolis, which have seen slight gains but nothing extraordinary. "If the market reaction was due to the virus, we would see hospital stocks and diagnostic companies soaring 10 percent, which is not the case. This is more a coincidence than a direct connection," he says.
Experts do agree that there could be some nervousness within the markets. Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services said that when the market doesn’t know what could happen or how it might impact business, there’s nervousness. But added, "For now, this virus is just new information the market has to absorb. We need clarity from the scientific community before drawing conclusions."
Nirav Karkera, Head of Research at Fisdom adds that his is a developing situation. "It is expected that any negative reactions by market participants would also be limited to the extent of it being knee-jerk in nature. In absence of any further adverse development being recognised or reported, one can expect limited downside across indices, especially in terms of declines that can be exclusively attributed to this illness outbreak," he said.
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