Downhill: Indian equities to be under pressure as COVID-19 spreads

"The spread of coronavirus, its impact on the global economy and the response of various nations to deal with it will also be closely watched," said Deepak Jasani, Head of Retail Research, HDFC Securities.

"Although global markets are heavily oversold, the bounces are not sustaining and we are witnessing fresh bout of negative news resulting in rallies being sold into. This is frustrating investors across the globe."

However, hopes of a likely stimulus similar to the ones given in US and Europe and the volatility curbing measures announced by the regulator SEBI are expected arrest a major downward spiral.

"SEBIs new norms are expected to be a market confidence boosting factor and is aimed at reducing the extreme volatility seen in F&O stocks," said Vinod Nair, Head of Research at Geojit Financial Services.

"This will impact the speculators and could lead to some short covering on Monday. For the long term markets will continue to focus on whether virus infection rates peaks out and also on the coordinated actions of RBI and the government to support businesses with relief package."

Market regulator SEBI on Friday announced measures to control the high volatility which has plagued the country's stock markets.

On Friday, SEBI revealed the measures to contain massive volatility that has plagued the stock markets. These include limits on positions that can be taken up by investors in the F&0 segment.

Furthermore, the regulator set certain conditions under which mutual funds or foreign investors can place bets on the index futures.

Meanwhile, Finance Minister Nirmala Sitharaman has held separate meetings with ministers who hold key economic portfolios. The decisions and recommendations of these meetings will be used as inputs for the economic response taskforce.

The task force is likely to announce measures, such as extension of loan tenors for the micro, small and medium enterprises (MSMEs) and relaxing NPA (non-performing assets) norms, while on the taxation part, GST may be waived on hospitality and tourism sectors.

At present, COVID-19 has had a severe impact on several sectors, including aviation, hospitality and tourism along with the overall economy.

"Easing monetary policy action across the globe shows the impact coronavirus would have on the economy,"  Siddhartha Khemka, Head of Retail Research, Motilal Oswal Financial Services.

"These concerns will most likely weigh on the markets which would take a while to recover from this significant price damage."

Technically, while the NSE Nifty has recovered sharply from last week's lows, the intermediate trend remains bearish.

"We remain open to the Nifty testing lows of 8,502 once again in the coming week. Any pullback rallies could find resistances at 8,883-9,128," Jasani added.