India stocks, rupee plunge on global cues
Dubai - The stocks crash wiped out Rs6.5 trillion of equity investors' wealth.
The Indian stock markets plunged today wiping out Rs6.5 trillion equity investors' wealth, with Sensex recording a loss of 2,400 points and Nifty50 trading below 10,400 points. The domestic indices were in line with the global markets on persistent fears of economic impact of the coronavirus epidemic.
BSE Sensex ended 1942 points lower at 35,635 while the NSE Nifty settled at 10,451, down 538 points. The stocks crash wiped out Rs6.5 trillion of equity investors' wealth, reported Indian media.
Krishnan Ramachandran, CEO, Barjeel Geojit Securities, said: "The Covid-19 lock-downs across various parts of the world and the break down of the Opec alliance has created a market mayhem leading to a sharp corrections to the Indian markets. Added to this was the Yes Bank fiasco late last week which has dented investor sentiments. Led by Reliance, ONGC, etc. a number of stocks have corrected by 10-15 per cent. However the fall in crude prices should augur well for India and also help the INR to stabilise, if the low oil price regime continues to play out."
Stocks of Reliance Industries registered the biggest fall in over 10 years as it fell to Rs1,094.95 per share. At 1.34pm, it was trading at Rs 1,100, lower by Rs1,70.05 or 13.39 per cent from its previous close. The stock fell most since October 2008. The benchmark index of BSE Sensex was trading at 35,232.67 points, lower by 2,343.95 points or 6.24 per cent from the previous close of 37,576.62 points. It had opened at the intra-day high of 36,950.20 and has so far touched a low of 35,109.18. The Nifty50 on the National Stock Exchange was trading at 10,314.25 points, lower by 675.20 points or 6.14 per cent from the previous close. It was a sell-off across sectors, led by financial, metal, energy and IT stocks - weighed on the markets.
"The Indian markets are following the global market mayhem and are pricing in a demand based slowdown. However, Investors should watch out for silver linings in the form of lower oil prices and lower interest rates which will throw up lots of opportunities to buy," said Srikanth Iyengar, managing partner, Five Capital.
The mayhem in the global and domestic markets is primarily due to the disruption of corona virus and it's presumptive impact. The sell-off was, therefore, clearly visible across sectors such as finance, metals, energy and IT. The fear of contagion has dampened business activities across the globe.
"We see this to be a temporary phase, keeping in mind the measures being taken by governments across the world. The markets are bound to recover over the next few days, once the impact is absorbed. The drop in crude prices could well be a blessing in disguise for the Indian government that's battling inflation. We do not see the spread of the virus impacting Real Estate, especially in the Mumbai Metropolitan Region, as the city has been largely unaffected as yet with no cases being reported," said Kaushal Agarwal, chairman, The Guardians Real Estate Advisory.
"Market idiosyncrasies were at its best today in India. Market psychology always alternates between greed and fear and it is the turn of fear now. While Indian markets should be celebrating the oil price fall which has resulted in a $22 billion windfall, participants were driven more by global meltdown and rushed to sell as if there is no tomorrow. In my view, this panic reaction to a virus threat is overblown. This is partly because of excessive caution exhibited by governments across the globe in what is clearly a containable problem. We must appreciate Fed's sagacity in anticipating (or perpetuating) this problem. Great opportunity for value buying indeed," said MR Raghu, managing director of Marmore Mena Intelligence.
Rising fears of a global recession coupled with selling from FIIs (Foreign Institutional Investors) triggered a fall of 1941 points or 5.17 per cent in BSE Sensex to 35,634. All 30 shares on BSE Sensex ended in the red with the largest Indian company Reliance Industries falling by 12.35 per cent. Vijay Valecha, chief investment officer, Century Financial, said: "In India, the fall in indices was compounded by rising risk in the financial system. Recently one of the major private sector banks, Yes bank, was bailed out in a move orchestrated by the country's Central bank, Reserve Bank of India, and the Indian government. Equities are likely to be subdued as India faces the prospect of a long battle with coronavirus amidst a rise in number of infections to 40."
The Indian rupee continued its downward journey on Monday, sliding another 16 paise to 74.03 against the US dollar in opening trade, tracking weak opening in domestic equities amid mounting fears of a coronavirus-led economic slowdown.
Fawad Razaqzada, senior market analyst at Trading Candles, said: "The outlook for the Indian rupee doesn't look great. Not only are investors worried over the recent violent clashes and the collapse of Yes Bank, there are growing concerns that the fallout from the coronavirus outbreak will hit emerging markets hard as tourists cancel their holidays."
Forex traders said weak opening in domestic equities and foreign fund outflows dragged the local unit. The rupee opened weak at 73.99 at the interbank forex market and then fell further to 74.03, down 16 paise over its last close and was hovering at Rs20.17 against one dirham. The rupee had settled at 73.87 against the US dollar on Friday. The 10-year government bond yield was at 6.07 per cent in morning trade.
Razaqzada also said: "The sharply lower oil prices as a result of Saudi Arabia's aggressive price-war strategy may provide some support for oil importers such as India, although in the short term this will be overshadowed by the impact of the coronavirus. Also, there is a possibility that the Indian Central Bank could intervene to stem the falls for the rupee."
With inputs from Agencies.