The rebound in domestic markets, which had seen a 7 per cent fall in the past six sessions, was stopped in its tracks after the health ministry reported two new coronavirus cases on Monday. Besides, an Italian tourist also tested positive for coronavirus in Jaipur, according to the Rajasthan government.
Supported by gains in Asian markets, the benchmark indices opened sharply higher, with the Sensex climbing as much as 785 points or 2 per cent only to reverse all gains in the last hour of trade. At one point, the Sensex was down 511 points over its previous close of 37,785.
After a highly volatile session, it finally settled at 38,144, down 153 points, or 0.4 per cent. It has now dropped for the seventh straight session and lost 3,180 points or 7.7 per cent since February 19. The Nifty closed at 11,133, down 69 points, or 0.62 per cent.
The broader index also witnessed one of its most volatile sessions ever, swinging nearly 400 points, or 3.6 per cent.
The 50 stocks in the index swung an average 5.7 per cent. The previous instance of such a wild swing was on September 19, when the indices reacted to the surprise cut in corporation tax. YES Bank swung 16.2 per cent — the most among Nifty components — followed by SBI, which moved almost 9 per cent. The India VIX, a gauge for market volatility, touched a low of 19.92 and a high of 26.34 — a movement of 32 per cent.
Most Asian indices closed with gains on optimism that global central banks would announce stimulus packages.
On Friday, US Fed Chairman Jerome Powell signalled a rate cut, by pledging to act appropriately. The Bank of Japan issued a statement, saying it would strive to provide ample liquidity and ensure stability in financial markets through appropriate market operations and asset purchases.
Market players said the central banks’ pledge was a positive. However, investors were sceptical about India being able to contain the spread of coronavirus.
The markets do not know how to react to the corona outbreak; they play the worst-case scenario. If there is no bad news overnight, we could come back tomorrow re-thinking,” said Andrew Holland, CEO of Avendus Capital Alternate Strategies.
The news of new corona cases could not have come at a worse time for India, which is reeling under an economic and political crisis. “Every Fortune 500 company, which was reliant on China for the manufacture of its products, will have to diversify its production chain. If our manufacturing states can grab this opportunity, this could be a heaven-sent,” said Saurabh Mukherjhea, founder of Marcellus Investments.
Barring three, all sectoral indices of the BSE ended the session in the red. Metal as well as oil and gas stocks were the worst-affected, with their respective gauges falling 2 per cent each. Two-third of Sensex components ended with losses. SBI was the worst-performing Sensex stock.