In India, the Sensex dropped 1,710 points, or 5.6 per cent, to end at 28,870, while the Nifty50 fell almost 500 points to 8,469. Both the benchmark indices are at levels last seen more than three years ago.
Financial stocks were at the forefront of the Wednesday’s market fall. Investors dumped private sector banking stocks, which were the most sought-after just months ago, on worries of the economic fallout of the coronavirus crisis, and their exposure to troubled sectors like telecom.
Concerns about the spread of coronavirus continued to accelerate. As of Wednesday, 151 cases were reported in the country. Three people have been confirmed dead. However, some medical experts have disputed the government figures and said the actual numbers could be 10 times higher.
Nomura has slashed its year-end Nifty target to 11,030 from 13,070 earlier.
“The spread of COVID-19 outside of China and in India has substantially raised market concerns on demand destruction and a significant near-term impact on economic growth. The government of India, along with local authorities, is undertaking steps to control the spread. However, these lockdown measures, along with the global slowdown, are likely to have a further negative impact on economic growth. India’s growth was already marred by weak demand and a feebler impact of monetary policy measures,” said Saion Mukherjee, head of India equity research, Nomura.
“There was a slowdown in the economy, and we were expecting a turnaround. That turnaround is getting delayed because of the corona outbreak. A lot of economic activity has been stopped which in turn has postponed demand and revival in earnings,” said UR Bhat, director, Dalton Capital India.
Globally, the virus has spread to 159 countries, affecting about 200,000 people and claiming over 8,000 lives. The pandemic has prompted countries to take drastic steps to isolate people at the cost of hurting economic activity. Most equity markets sank and even the so-called havens saw a sell-off on Wednesday as investors preferred to move to cash.
Wall Street resumed a steep slide on Wednesday while bond markets rushed to price in the sheer scale of government support programmes and handouts announced over the past 24 hours, all aimed at softening the economic shock of coronavirus. Dire trading conditions continued to make two-way trading difficult and exaggerated the moves as investors piled into cash with the sell-off in government bonds in particular drawing European Central Bank support for the Italian debt market.
Brent crude extended its slide and was trading at $26 per barrel, the lowest level in 17 years, due to demand meltdown and supply glut. Analysts said tightening travel restrictions, countries entering lockdown, and a fall in demand from the US has pushed the oil prices down. Market players said the excessive fall in oil prices could affect the remittances by non-resident Indians employed in oil-producing countries. They said lower oil prices could accelerate the selling by overseas investors.
The fall in the market was despite the US and Eurozone announcing trillion-dollar stimulus packages. Market experts said investors feared the measures could be inadequate.
Overseas investors pulled out Rs 5,085 crore on Wednesday, taking their last-month long-selling to nearly Rs 60,000 crore. Domestic investors provided buying support to the tune of Rs 3,636 crore. Experts said overseas investors were offloading stocks at whatever value, fearing that the markets would fall further and it could be a long road to recovery.
Overall, 2,045 companies declined, and 346 companies advanced. Nearly 837 stocks hit their 52-week lows and 437 were locked in the lower circuit. All the Sensex components barring two ended the session with losses. IndusInd Bank was the worst-performing Sensex stock and tanked 24 per cent.
All the BSE sectoral indices fell. Telecom and finance stocks fell the most and their gauges fell 9.5 per cent and 7.6 per cent respectively.
Currently, the cumulative value of all BSE listed stocks is Rs 113 trillion, down by Rs 47 trillion in two months.