The domestic stock market sharply came off day's low and ended with modest losses on Wednesday. The S&P BSE Sensex, fell 214.22 points or 0.55% at 38,409.48. The Nifty 50 index lost 49.10 points or 0.43% at 11,254.20.

Shares slumped in the afternoon after India's Health Minister Harsh Vardhan said that a total of 28 cases of coronavirus have been confirmed in India. The media reports of United States conducting an airstrike against Taliban in Nahr-e Saraj of Helmand district also triggered selling. However, as the day was drawing to close, investors resorted to aggressive buying at lower levels helping the bellwether indices recover most of their losses.

India's Health Minister Harsh Vardhan on Wednesday said that all the international tourists coming to India are being screened at airports. Meanwhile, Delhi Chief Minister Arvind Kejriwal said that the Delhi government has made full preparations to tackle the situation. For providing treatment to the patients, 25 Delhi hospitals -- including 19 government hospitals and six private hospitals -- have been equipped to handle the influx of patients in case of an emergency.'

The broader market tumbled. The S&P BSE Mid-Cap index slipped 2.65% while the S&P BSE Small-Cap index tumbled 2.86%. Both these indices steeply underperformed the Sensex.

The market breadth was weak. On the BSE, 696 shares rose and 1707 shares fell. A total of 131 shares were unchanged. In Nifty 50 index, the breadth was negative with 22 stocks advancing and 28 stocks declining.

Economy:

The government on Wednesday approved 100% Foreign Direct Investment (FDI) in Air India by foreign entities/NRIs under the automatic route. Earlier, the FDI limit permitted for NRIs was 49%. After its unsuccessful bid to sell Air India in 2018, the government this time has decided to offload its entire stake.

Meanwhile, the IHS Markit India Services PMI increased to 57.5 in February 2020 from 55.5 in January 2020. The latest reading pointed to the strongest pace of expansion since January 2013, as both new orders and output rose at a faster pace.

Buzzing Index:

The Nifty Pharma index rose 2.19% to 8,094.15, extending gains for second day. The index has added 7.41% in two sessions.

Cipla (up 5.13%), Dr Reddy's Laboratories (up 4.38%), Sun Pharmaceutical Industries (up 2.86%), Glenmark Pharmaceuticals (up 2.51%), Lupin (up 2.19%), Aurobindo Pharma (up 1.98%), Wockhardt (up 1.68%) and GlaxoSmithKline Pharmaceuticals (up 0.04%) advanced.

IPCA Laboratories (down 5.16%), Alkem Laboratories (down 3.47%), Piramal Enterprises (down 1.33%) and Divi's Laboratories (down 0.42%) declined.

Strides Pharma Science fell 0.36% to Rs 464.95. The company said it received USFDA's approval for Tetracycline Hydrochloride capsules. Tetracycline Hydrochloride capsule is an antibiotic used to treat many different bacterial infections of the skin, intestines, respiratory tract, urinary tract, genitals, lymph nodes, and other body systems.

Cadila Healthcare fell 1.61% to Rs 256.

The company received a final approval from the United States Food & Drug Administration (USFDA) to market Emtricitabine and Tenofovir Disoproxil Fumarate tablets. The medicine will be used with other HIV medications to help control HIV infection. The company said the drug will be manufactured at the Zydus Cadila's manufacturing facility at Special Economic Zone (SEZ), Ahmedabad, Gujarat.

Stocks in Spotlight:

Tech Mahindra rose 2.25% to Rs 769.50. The company sold Terra Payment Services (Netherlands) BV & its subsidiaries for an upfront payment of $9 million and a bonus pay-out upto $13.8 million to Prime V Holding 2 EV and Partech Africa SLP as on Tuesday, 3 March 2020 on a slump sale basis. The companies entered into an agreement on 12 September 2019.

Infosys added 1.59% to Rs 758.20 after the company announced a strategic long-term partnership with K+S AG to support the latter's 'Shaping 2030 Strategy'. Infosys will setup two state-of-the-art, centralized and dedicated datacentres in Kassel, Germany and 16 regional datacentres in Europe, USA, Canada, and South America along with a public cloud ecosystem

Vedanta fell 2.59% to Rs 116.45 after Moody's Investors Service downgraded Vedanta Resources corporate family rating (CFR) to B1 from Ba3. Moody's also downgraded the rating on senior unsecured bonds issued by Vedanta and those issued by its wholly owned subsidiary, Vedanta Resources Finance II Plc and guaranteed by Vedanta, to B3 from B2. The outlook on all ratings is stable. The downgrade of Vedanta's ratings was triggered by a sustained deterioration in the company's credit profile, and our expectation that its credit metrics will remain weak for the previous ratings, Moody's said in a press release.

Larsen & Toubro fell 1.40% to Rs 1165.20. The company's water & effluent treatment business secured a 'significant' order from Oman. The order is for the design and execution of a water infrastructure project to enhance the Al Dhakhlia Water Transmission System, Phase - II. The company said that this is a repeat order from the client and has been secured under international competitive bidding. As per the L&T's classification, the valuation of the 'significant' order stands between Rs 1,000 and 2,500 crore.

Hindustan Aeronautics (HAL) fell 3.91% to Rs 646.55 after it received a notice from International Court of Arbitration of the International Chamber of Commerce (ICC) on request for arbitration from RUAG Aerospace Services GMBH. HAL has initiated necessary action with reference to arbitration process. The amount in dispute partially quantified by the opponent party is $21,872,500 (i.e. EUR 20,000,000) against alleged damages on breach of agreement regarding supply of structural parts for production of Dornier-228, by HAL. Shares of HAL was down 3.10% to Rs 652.

Global Markets:

European stocks were trading higher while most Asian markets ended higher on Wednesday reacting to the US Federal Reserve announcing an emergency 50 basis point cut to interest rates on Tuesday.

Meanwhile, the United States conducted an airstrike against Taliban in Nahr-e Saraj of Helmand district, US military spokesperson told the media on Wednesday. This was a defensive strike to disrupt the attacks, he said. This comes hours after more than 20 Afghan soldiers and police officers were killed in northern Afghanistan overnight in the latest Taliban attack.

The US market finished sharply lower on Tuesday, after a volatile trading session, and Treasury yields fell to historic lows, with Wall Street deeming a surprise inter-meeting interest-rate cut from the Federal Reserve insufficient to restore confidence in a market that has been rocked by worries about the spread of coronavirus world-wide.

The decline for markets came as the Fed announced a half-a-percentage-point rate cut, saying that while the economy's fundamentals remain strong, the "coronavirus-poses evolving risks to economic activity."

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