New Delhi: India’s stock markets witnessed one of the sharpest falls in recent years on Friday, as investors turned nervous on fears of the coronavirus turning into a global pandemic.
Initial hope that the epidemic that started in China would be over in a few months and economic activity would return to normal have been shattered, as new infections reported around the world now surpass those in China.
As a result, the S&P BSE Sensex nosedived 1,448 points or 3.64% to end the session at 38,297. All 30 constituents ended in the red. Tech Mahindra (down around 9%) took the biggest knock on the index. Other major contributors to the index were Reliance Industries (RIL), Infosys, HDFC, ICICI Bank, and TCS.
On the NSE, the 50-share index Nifty plunged 432 points or 3.7% to end at 11,202.
The Volatility index, India VIX, zoomed 29% to 22.87 levels.
Sectorally, all the indices on the NSE ended deep in the red. Nifty IT index dropped over 5% cent to 15,274 levels while Nifty Metal index cracked over 7% to 2,233 levels.
“The Indian market nosedived along with global equities, on fears that the coronavirus will hamper global growth. While there is no telling what will happen in the next trading session, my sense is that we will be much better-off, a couple of months’ down the road,” said Amar Ambani, senior president and head of research, YES Securities.
The market fall so far is factoring in a reasonably bad case-scenario, in my opinion. I am hopeful that people will increasingly be quarantined, a possible cure will be invented and the advent of summer in many countries, will result in fading away of the virus effect. While we pray for speedy recovery of victims, the fact is that there have been deadly disease attacks in the past as well and have been dealt with appropriately,” Ambani further said.
Also read: Why India Should Worry About the New Coronavirus
“Even as this issue drags near-term growth in certain sectors, what lends support is the beaten-down market multiple. We must remember that the broader Indian market has been in a consolidation phase since start of year 2018. In summary, near term index support level is difficult to call, but time-wise, the market impact should not last long,” he added.
Global markets
World share markets were headed for their worst week since the depths of the 2008 financial crisis as investors ditched risky assets on fears the coronavirus would become a pandemic and trigger a global recession. Stock futures showed European indexes set to track the rout in their Asian counterparts on Friday, which comes after another massive selloff on Wall Street overnight.
MSCI’s regional index excluding Japan shed 2.7%. Japan’s Nikkei slumped 4.3% on rising fears the Olympics planned in July-August may be called off due to the coronavirus.
In commodities, US crude futures fell 3.2% to $45.59 per barrel, having lost 14.5% so far on the week, which would be the deepest fall in nearly nine years.
(With inputs from agencies)