Nearly Rs 5 lakh crores worth of investors’ wealth was exhausted in the initial few ticks on Friday as indices stared at one of the worst falls in history tracking their global peers and scared by a rapid spread of coronavirus across the world.
At 9.50 am, the BSE Sensex was trading 1,145.29 points or 2.88% lower at 38,600. NSE barometer Nifty fell 347.90 points or 2.99% to 11,285.40. The BSE m-cap fell Rs 3.77 lakh crores to Rs 148 lakh crores. India VIX, the barometer of fear in the markets, spiked nearly 20% to the top 21-mark.
Following are the few factors dragging the indices:
Corona Virus Reaches 6 Continents
The coronavirus that reached shores of all 6 habitable continents in the world was the biggest factor spooking investors on Dalal Street. Even though China has seen a fall in the number of new cases, other countries are seeing rapid growth in infections as well as deaths.
Around 10 countries reported their 1st virus cases in the past 24 hours, including Nigeria, the most densely populated country in Africa and the 1st case in sub-Saharan Africa. The number of cases in South Korea crossed above 2,000. In Iran, the death toll from coronavirus had risen to 26, by far the highest number outside China.
US indices see the record fall
Sudden Crash in the US markets also moistened the sentiments on the Street. The S&P 500 ended 12% below its Feb19 record close, marking its fastest correction ever in just 6 trading days.
The Dow, down 1,190 points, registered a record 1day points drop, which was also its 4th 1,000 points decline in history and the 2nd this week.
GDP Growth Likely To Flatline
Economists said that Gross Domestic Product (GDP) growth rate is likely to be flat in the 3rd quarter. The government will release GDP data later in the day.
State Bank of India said the growth will likely stay flat at 4.5% in the Oct-Dec 2019. It also said that India faces the risk of getting impacted by the coronavirus epidemic economically because of it.
FPIs Offload Rs 10,000 Crores in 4 days
Foreign portfolio investors offloaded shares worth Rs 3,127.36 crores on Thursday, taking their total sales to nearly Rs 10,000 crores in the past 4 days. Money managers believe that household stocks will continue to see outflows if the global market rout does not end, even though the country has been relatively unaffected by the outburst.
Technical Outlook Weak
Dreadful headlines continued to make life difficult for the Bulls and Nifty formed a ‘Hammer’ candle pattern closing at 11,633. Whereas analysts expected that level to provide some support, they also warned the index could slide if it fails to hold the level.
“We expect Indian index to continue correction with Bank Nifty on the receiving end. The ratio of Bank Nifty versus Nifty is hovering near important resistance of 2.60-2.61. Follow-up action in the Bank Nifty needs to be closely watched as sustenance below 30,000 could drag Bank Nifty towards month’s lowest level (i.e. 29,613),” analysts from YES Securities said.