Stocks tank as coronavirus spreads
A sharp rally in domestic equities proved short-lived as the detection of fresh coronavirus cases in India saw the benchmark index giving up all its gains and settling with a loss of 153 points.
The 30-share Sensex slumped nearly 1300 points from its peak as panicked investors dumped stocks after the Union health ministry announced that there has been two fresh cases of the coronavirus — one in Delhi and another in Telangana in the country — taking the number of people to test positive for the respiratory virus to five so far.
These cases come at a time the domestic economy is already grappling with a protracted slowdown.
While latest reports indicate that the global death toll from the virus has crossed 3,000, the markets remain worried about its economic impact.
The development also hit the rupee with the domestic unit paring all its initial gains and settling 52 paise down at 72.76 against the dollar. However, gold prices rallied, rising Rs 391 to Rs 42,616 per 10 gram in the national capital.
This is the seventh consecutive fall for the Sensex and market experts have warned that stocks were likely to remain weak till there was some positive news on the control of the coronavirus.
There was other disappointing news as well with various automobile companies reporting poor February sales even as the sector faces speed bumps in the form of BS-VI implementation from April amid supply disruption because of the virus.
Leading two-wheeler manufacturers Hero MotoCorp, Bajaj Auto and TVS Motor Company on Monday reported double-digit decline in sales because of the double whammy.
Sales of Hero MotoCorp, the country’s largest two-wheeler maker, fell 19.27 per cent to 4,98,242 units in February from 6,17,215 units a year ago.
Bajaj Auto’s sales declined 10 per cent to 3,54,913 units. The scrip dropped 3.21 per cent to close at Rs 2,797.70 on the BSE.
Stocks had got off to a strong start over expectations that global central banks will take some action to limit the adverse impact of the coronavirus on the world economy.
The Sensex opened sharply higher at 38910.95 and hit an intra-day high of 39083.17 — a gain of nearly 786 points.
However, it came under immense pressure in the last hour of trade and ended at 38144.02 — a drop of 153.27 points, or 0.40 per cent.
On the NSE, the broader Nifty shed more than 400 points from its day’s high and closed lower by 69 points, or 0.62 per cent, at 11132.75.
“The markets would continue to remain highly volatile and weak till the fast spread of coronavirus gets controlled,” Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services, said.
The broader markets, too, felt the heat with the midcap and smallcap indices falling up to 0.77 per cent even as the BSE metal, oil and gas, basic materials, utilities, energy and telecom indices declined up to 2.05 per cent.
Top losers in the Sensex pack included SBI, Tata Steel, Hero MotoCorp, Bajaj Auto, ONGC and IndusInd Bank.