India’s stocks fell, as the the worlds second-most populous nation edged toward a lockdown after the number of coronavirus cases in the country approached 400.

The S&P BSE Sensex Index slid as much as 9.1% to 27,197.81, within a whisker of triggering a 10% circuit breaker at the open, before recouping slightly to trade 7.3% lower as of 9:25 a.m. in Mumbai. The NSE Nifty 50 Index tumbled as much as 9.2%, tracking declines across the region as the flight from riskier assets continued. The regional MSCI Asia Pacific Index lost 2.1%.

Prime Minister Narendra Modi and state leaders over the weekend imposed an almost-complete lockdown, which will probably worsen an economy already set to slow to an 11-year low. While the spread of the coronavirus pandemic has so far been slow in India, T. Jacob John, the former head of the Indian Council for Medical Research’s Centre for Advanced Research in Virology, warned the virus could spread to as much as 10% of India’s 1.3 billion population.

Policy makers immediate focus is ensuring Indians have cash in hand to buy essentials, the governments principal economic adviser, Sanjeev Sanyal, said in an interview in New Delhi on Friday.

Economic management of the situation now depends on the resilience of domestic demand, ANZ Banking Group Ltd. analysts wrote in a note on Monday. The ability to support domestic demand with fiscal and monetary accommodation is constrained and most of all, the dysfunctional financial system will restrict the availability of credit for a long time, they added.

New measures

The S&P BSE Sensex Index last week marked its biggest weekly decline since October 2008. India’s stock exchanges will remain open despite a lockdown in the country’s financial capital of Mumbai, Economic Affairs Secretary Atanu Chakraborty said in an interview. A spokesperson for the regulator, the Securities and Exchange Board of India, said markets will function at normal hours Monday.

India’s market regulator Friday evening raised margin requirements and capped derivatives exposure. The measures, which will stay in force for a month, are aimed at discouraging traders from aggressively building short positions at a time when volatility in the nations equities has spiked to levels last seen in the aftermath of the 2008 financial crisis.

The central bank last week announced measures to boost liquidity but held back from following global peers with a rate cut. India’s government is considering offering easier loan repayment terms and tax breaks for smaller companies, a person with knowledge of the matter said.

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