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Home / Business / Coronavirus concerns: Stocks tumble 8%

Coronavirus concerns: Stocks tumble 8%

Investors are also bracing for a sordid Tuesday as the RBI did not announce a much-anticipated rate cut
Citizens cover their faces as they watch the stock exchange index on a display screen outside the Bombay Stock Exchange building in Mumbai.

Our Special Correspondent   |   Mumbai   |   Published 16.03.20, 08:54 PM

Investor wealth was eroded by Rs 7.62 lakh crore on Monday as stocks again went into a tailspin over concerns of the rapid spread of the novel coronavirus. The benchmark Sensex saw its second worst plunge of 2713 points, while the rupee fell 50 paise against the dollar to settle at 74.25 against the US currency. Oil continued to be under pressure as Brent crude futures crashed 7.53 per cent to $31.30 per barrel.

Monday’s fall came after some relief last Friday when stocks had staged a record intra-day recovery backed by domestic institutions and value buying. Expectations of more central banks actions to shield their economy from effects of the virus had also contributed to the rally.

However, emergency action by the US Federal Reserve failed to revive the sentiment as worries remained across markets that the global economy could be headed for a recession.

Investors are also bracing for a sordid Tuesday as the RBI did not announce a much-anticipated rate cut.

In the US, stocks dropped 8 per cent in the first minutes of trading on Monday on Wall Street and triggered another temporary halt to trading as huge swaths of the US economy come closer to shutting down.

The selling was just as aggressive in markets around the world. European stocks and crude were both down close to 10 per cent. The world’s brightest spot may have been Japan, where the central bank announced more stimulus for the economy, and stocks still lost 2.5 per cent.

Market observers point out that investors should be prepared for volatility in the form of more correction and intermittent rallies over the coming days and that stability will only be restored after the outbreak of the virus is contained.

On the BSE, the 30-share Sensex opened more than 1000 points lower at 33103.24 and fell sharply below the 32000-mark to hit an intra-day low of 31276.30 — a fall of more than 2827 points. It finally settled 2713.41 points, or 7.96 per cent, lower at 31390.07.

On the NSE, the NSE Nifty gave up the 9200 level, slumping 757.80 points or 7.61 per cent, to close at 9197.40.

The fall was also broad-based with both the mid-cap and small-cap indices cracking up to 6 per cent.

All Sensex components ended in the red with the shares of IndusInd Bank being the top loser as it crashed 17.50 per cent. It was followed by Tata Steel, HDFC, ICICI Bank, Axis Bank, Infosys and ITC. Reliance Industries plunged 8.28 per cent to close the day at Rs 1,015.25 on the BSE. The fall saw Rs 58,091.87 crore being wiped out from its market valuation.

“The US Federal Reserve slashed interest rates in its second emergency move this month, to help shore up the US economy amid the rapidly spreading coronavirus pandemic. Despite this, global markets plunged. Easing monetary policy action across the globe shows the impact coronavirus would have on economy.

“These concerns will most likely weigh on the markets which would take a while to recover from this significant price damage,” Siddhartha Khemka, head — retail research at Motilal Oswal Financial Services said.

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