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The coronavirus pandemic sent stock markets to the ICU on Thursday as fears of a global economic meltdown dragged down key indices by historic levels.
Over ₹11-lakh-crore of market capitalisation of listed companies in India was wiped out as key benchmark indices Sensex and Nifty crashed by 8.2 per cent, the worst single-day fall ever.
Market experts are of the view that a further market crash will be arrested only when the coronavirus situation improves as it is causing an economic slowdown.
Foreign institutional investors sold stocks worth ₹3,475 crore in a single day. Domestic institutional investors were buyers of stocks worth ₹3,918 crore. The panic is so deep that brokers were asking clients to pay up fully in advance.
A near 5 per cent fall in the US futures index of S&P, Dow Jones and Nasdaq on Thursday riding on a similar crash on Wednesday led to relentless selling of stocks in India.
Global slowdown fears
Stock markets the world over are bracing for a near-2halt of the global economy in the near term as several countries are restricting travel and public gathering to arrest the spread of Coronavirus.
When the markets opened in the US, trading was suspended on the Wall Street for the second day this week as the Dow Jones index fell by 1,700 points. In India, Sensex was pulled down by 3,000 points in a single trading session to close at 32,778. Nifty was down 900 points to close near 9,500 levels. Both indices are down nearly 23 per cent from their peak levels in January.
Nifty Bank Index worst hit
On Thursday, the Nifty Bank index, the largest traded derivative index after Nifty, saw its worst fall of 9.5 per cent, or 2,516 points, in a single trading session. The banking sector has been under pressure as YES Bank’s share price crashed below its face-value this week. Short-selling is high in the market in several counters as there are no buyers at all, said brokers.
“Speculators can’t have a free run on the economy and that should be the message, which must be read loud and clear by the decision-makers of the country,” said Deven Choksey, Managing Director, KR Choksey Investment Managers.
“We believe the fears are overdone. While there could be some flow of deposits possibly from smaller private sector banks to larger private sector banks or PSU banks, we believe the outflow of deposits would be arrested as the RBI and the government might not allow YES Bank’s depositors to take a hit,” global research house Macquarie said in a note.
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