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BL Research Bureau
As India went into lockdown to contain the spread of Covid-19, markets were expected to take a hard knock. With the Sensex hitting the lower circuit early in trade today, the week has begun on yet another turbulent note. The pain is accentuated by the fact that many heavyweight bluechip stocks are on a free fall over the past week.
Monday morning carnage was no different.
Within the S& P BSE 100, heavyweights such as Reliance Industries (contribution to the index of -79 points), HDFC Bank (-79 points), ICICI Bank (-70 points), HDFC (-46 points), Axis Bank (-41 points), Infosys (-41 points), ITC (-32 points), Kotak Mahindra Bank (-30.8 points), TCS (-23 points) etc. have led the fall on Monday---most of them plunging 10-20 per cent.
In terms of the quantum of fall, as in the past week, the decline on Monday was led by banking and finance stocks. Most of these stocks fell by a steep 14-20 per cent before the trading came to halt.
As is becoming evident from the slump in stock prices since January this year, banking and finance stocks are particularly taking it on the chin. The widespread sell-off, even in the leading names in the sector, is because the COVID-19 would have a deeper impact on the sector that is highly-leveraged. The sharp slowdown in the economy, which is likely to lead to substantial job losses and rise in delinquencies, will impact banks and NBFCs adversely in the coming quarters.
Finance has a 36 per cent weightage in the BSE 100 index, followed by IT (12.5 per cent), FMCG (11 per cent), and Oil & Gas (10.9 per cent).
Axis Bank fell 20 per cent, while ICICI Bank, Shriram Transport Finance, IndusInd, M&M Financial and Federal Bank have fallen about 15 per cent on Monday (before the trading halt).
Even stocks in the auto space have been feeling the heat. Hero Motocorp, Maruti, M&M, Motherson Sumi, TVS Motor, are stocks that witnessed sharp declines, early in trade on Monday.
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