Global markets, including India, have been in a meltdown over the past few sessions, with the US markets registering the fastest 10% decline from record highs inhistory. Nifty too has retreated notably, falling below post-Budget session lows.
Map showing countries where Coronavirus has spread
The red circles represent nations and regions within those nations where the virus has spread. The larger the circle size, the larger is the number of cases in those nations/regions, and vice versa. As can be seen from the above three charts, the virus has now started spreading rapidly worldwide, with a number of confirmed cases and deaths continuing to increase.
- Chemicals:
Going forward the sector may face disruptions in several areas i.e sourcing raw materials from China and managing additional orders from downstream product manufacturers who sourced from Chinese competitors (though this may be transitory).
- Auto & Auto parts:
Delay in resolving corona issue is posing challenges as China is our 2nd largest trade partner in the auto component space. As smaller components are majorly imported from China, we may find an increase prices of components in after market will increase.
Positive:
Aftermarket supplies are directly affected. Prices in aftermarket have increased significantly, which benefits organised players.
- Consumer Durables:
Consumer durable companies will see limited impact on sales in near term as they have inventory of finished goods. However, if raw material supplies from China does not resume from March then companies will start seeing impact in sales with plant shut downs.
The disruption in logistics (mainly the sea routes to and from China) has increased freight cost and will escalate further if things will not get controlled
- Steel Sector:
China Steel demand gets impacted
We continue to find aftermath of Coronavirus concerning for the sector as:
1) Steel inventory has swelled to record-high levels
2) Supply chain disruptions are expected to owe to the ongoing auto slowdown.
Domestic steel prices fare lower
On the positive side, we are seeing the first signs of a demand pick-up in China. By mid-March, nearly 70% of companies are expected to resume operations.
Banking and Financial Services & Insurance:
Supply disruption may impact the working capital and stretched the payment, hence this may have a negative impact on asset quality.
Deteriorating macro-economic factors due to global supply disruption may have the negative impact personal loans; therefore personal loan growth may be impacted going forward.
