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Markets witness bloodbath on Monday
Mar-30-2020

Indian equity benchmarks witnessed a bloodbath on Monday’s trading session, by falling over four percent, tracking weak cues from overseas as investors braced for a prolonged period of uncertainty as coronavirus-induced lockdowns tightened across the world and in India. Key indices opened in red and stayed in the negative terrain for whole trading session, as traders remain concerned with the International Monetary Fund’s (IMF) statement that the world is in the face of a devastating impact due to the coronavirus pandemic and has clearly entered a recession, but projected a recovery next year. Some cautiousness also came in as the country’s foreign exchange reserves fell by a whopping $11.98 billion to $469.909 billion in the week to March 20 as the Reserve Bank continued to supply dollars into the market to stem fall in the rupee.

Key indices continued their free fall during the final hour of trade, as Fitch Solutions slashed its estimate for India's GDP growth in the fiscal starting April 1 to 4.6 per cent due to weaker private consumption and contraction in investment amid coronavirus outbreak, costing economies around the globe. Anxiety persisted over the street, even after the government constituted 11 empowered groups to suggest measures to ramp up healthcare, put the economy back on track and reduce misery of people as quickly as possible post the 21-day lockdown imposed to contain the coronavirus pandemic. Traders even overlooked the Economist Intelligence Unit (EIU) in its post-Covid-19-outbreak stating that even as the Indian economy is likely to be battered by the Coronavirus pandemic this year, it is still likely to be better off than all other G20 countries.

On the global front, Asian markets ended lower on Monday, while European markets were trading in red, following a steep drop on Wall Street as the jubilation from last week's enormous US stimulus package faded and investors returned their attention to the soaring infection and death rate of the coronavirus. Back home, airline stocks such as InterGlobe Aviation and SpiceJet fell after the International Travel Association warned that Indian air carriers are in grave and immediate danger of insolvency in the wake of the pandemic outbreak that is disrupting the industry across the globe. Power stocks too were in watch with report that peak power demand in the country dipped over 26% to 120.31 gigawatts (GW) on March 26 as compared to 163.72 GW on March 20, showing impact of a nationwide lockdown amid the coronavirus outbreak.

Finally, the BSE Sensex lost 1375.27 points or 4.61% to 28,440.32, while the CNX Nifty was down by 379.15 points or 4.38% to 8,281.10.   

The BSE Sensex touched high and low of 29,497.57 and 28,290.99, respectively and there were 6 stocks advancing against 24 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 2.13%, while Small cap index was down by 1.75%.

The few gaining sectoral indices on the BSE were Healthcare up by 1.07%, FMCG up by 0.67% while, Realty down by 7.01%, Bankex down by 5.85%, Auto down by 5.44%, Telecom down by 3.89%, Capital Goods down by 3.27% were the losing indices on BSE.

The top gainers on the Sensex were Tech Mahindra up by 4.94%, Nestle up by 4.49%, Axis Bank up by 2.50%, Hindustan Unilever up by 2.19% and Titan Company up by 0.77%. On the flip side, Bajaj Finance down by 11.95%, HDFC down by 10.92%, Tata Steel down by 8.36%, HDFC Bank down by 7.96% and ICICI Bank down by 7.67% were the top losers.

Meanwhile, Moody’s Investors Service has sharply cut India’s growth forecast to 2.5% for calendar  year 2020 from 5.3% earlier after the government ordered a nationwide lockdown to curb the spread of the coronavirus. It estimates a 5% growth for calendar year 2019. It expects a sharp rebound in India’s growth in calendar year 2021 to 5.8%.

India imposed a three-week nationwide lockdown to curb the spread of the coronavirus pandemic, starting March 25. It said the lockdown will dampen economic growth in India, already facing credit availability issues. In India, credit flow to the economy already remains severely hampered because of severe liquidity constraints in the bank and non-bank financial sectors.

Besides, it said that advanced economies are seen contracting 2% in 2020 against 1.7% growth in 2019 while emerging economies will slow to 1.9% from 4.2%. China is forecast to grow 3.3% in 2020 against 6.1% in the previous year. A general lack of social safety nets, weak ability to provide adequate support to businesses and households, and inherent weaknesses in many major emerging market countries will amplify the effects of the coronavirus-induced shock.

The CNX Nifty traded in a range of 8,576.00 and 8,244.00 and there were 12 stocks advancing against 38 stocks declining on the index.

The top gainers on Nifty were Cipla up by 6.71%, Tech Mahindra up by 4.74%, Nestle up by 3.78%, Dr. Reddys Lab up by 2.52% and Axis Bank up by 2.35%. On the flip side, Bajaj Finance down by 11.89%, HDFC down by 10.83%, Kotak Mahindra Bank down by 8.37% and HDFC Bank down by 8.12% and Tata Steel down by 8.03% were the top losers.

European markets were trading in red; UK’s FTSE 100 decreased 38.13 points or 0.69% to 5,472.20, France’s CAC fell 30.07 points or 0.69% to 4,321.42 and Germany’s DAX was down by 16.43 points or 0.17% to 9,616.09.

Asian markets ended lower on Monday as reports of surging numbers of infections from the corona virus pandemic prompted shutdowns of travel and business in many parts of the world. The world is now in a recession, International Monetary Fund managing director Kristalina Georgieva said, which will be worse than in the global financial crisis in 2009. The corona virus outbreak has infected more than 723,000 people worldwide and killed over 34,000, according to a tally by Johns Hopkins University. Chinese and Hong Kong shares ended lower as investor concerns over corona virus-driven global shutdowns overshadowed an unexpected rate cut by the country's central bank. The People's Bank of China decided to lower the 7-day reverse repo rate to 2.20 percent from 2.40 percent. While, the central bank injected CNY 50 billion into the financial system and said it would maintain sufficient liquidity in the system to underpin economic activity.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

2,747.21
-24.99
-0.90

Hang Seng

23,175.11
-309.17
-1.32

Jakarta Composite

4,414.50
-131.07
-2.88

KLSE Composite

1,328.88

-14.21

-1.06

Nikkei 225

19,084.97
-304.46
-1.57

Straits Times

2,416.24
-112.52
-4.45

KOSPI Composite

1,717.12
-0.61
-0.04

Taiwan Weighted

9,629.43
-69.49
-0.72
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