Sensex slumps 1,400 points with FPIs still on sell mode

Our Bureau Mumbai | Updated on March 30, 2020

Offload ₹4,300-cr stocks; fear of prolonged lockdown also weighs on the market

The coronavirus threat continues to spook stock markets in India. Foreign portfolio investors sold stocks worth ₹4,363 crore in the cash segment on Monday, leading to the Sensex plummeting 1,375 points or 4.61 per cent to close at 28,440. The broader Nifty index fell by 379 points or 4.38 per cent to close at 8,281. The bank Nifty index went down by 1,186 points or 6 per cent to close at 18,782.

Domestic institutional investors were net buyers of stocks to the tune of ₹3,550 crore. Retail and high-net-worth individuals bought stocks worth ₹167 crore, per BSE data. Proprietary traders, brokers who buy and sell on their own book, were net sellers to the tune of ₹140.91 crore.

Market players fear a hit to bank balance sheets even after the Reserve Bank of India on Friday announced a slew of measures to support the economy. Among various things the RBI allowed deferment of loan payments to banks for three months. However, there is uncertainty over the economic cost of a prolonged lockdown to combat the coronavirus.



Crisil cuts GDP growth forecast

Crisil has slashed its base-case gross domestic product (GDP) growth forecast for fiscal year 2021 to 3.5 per cent from 5.2 per cent earlier. The past few days have seen global growth forecasts slashed and financial markets heaving as the Covid-19 pandemic spread across the world. The adverse effects that w ill follow can dwarf the gains from the sharp drop in crude oil prices, and the anticipated monetary and fiscal stimuli.

Brokerage house ICICI Securities said that only if the Nifty index breached the 7,500-level on a closing basis would there be a further prolonged correction in the index to 6,800 or 7,000 levels.

In a note released on Sunday, Morgan Stanley said it expected global economic growth in 2020 to decline 0.6 per cent (y-o-y), past the 0.5 per cent rate of contraction seen in 2008, in what it said was “the weakest pace of growth during peacetime since the 1930s”.

According to Ruchit Jain, technical analyst at Angel Broking, the Nifty levels of 8,600 and 8,850 will now be the immediate resistances on pullback moves. “During such volatile times, traders are advised to avoid trading aggressively and trade with a proper risk management and exit strategy,” Jain said in a note.

Published on March 30, 2020

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