The benchmark indices plunged on Friday, hitting their lowest levels since mid-October and correcting for the sixth day in a row, on fears that coronavirus outbreak may trigger recession across major economies. Hopes the coronavirus would be contained to China vanished on Friday as infections spread rapidly around the world, compelling countries to stockpile medical equipment and investors to take flight in expectation of a global recession.
At 3:00 pm, the Sensex was at 38,320, lower by 1,419 points – or 3.5 per cent – and the Nifty was at 11,205, down 430 points – or 3.7 per cent. All the sectoral indices on the National Stock Exchange (NSE) suffered losses, and 49 out of the 50 shares in the Nifty basket traded lower at the time. Banking, automobile, metal and IT shares being the worst hit in the day’s carnage.
Asian stocks tracked another overnight plunge in Wall Street’s benchmarks on Friday with the markets in China, Japan and South Korea posting heavy losses. The European indices, including the CAC, DAX and FTSE, had cuts of around 3 per cent each in early trades as the virus spread into new regions across Europe and elsewhere.
Analysts say the increase in the number of coronavirus cases highlighted the risk of world economy taking a bigger blow than anticipated earlier.
“Until last week, the market was of the view that coronavirus is going to have only a minimum impact on global economy… An increase in the number of new cases is changing the view,” said Vinod Nair, head of research at Geojit Financial Services. “There are fears of some slowdown in the economy.”
The spread of the pandemic beyond China is forcing investors to reassess the potential risk to global business, according to some analysts. “The fear factor in markets is going up as the coronavirus is spreading across countries,” said Rusmik Oza, senior VP (head of fundamental research-PCG) at Kotak Securities.
Back home, analysts await official data on gross domestic product (GDP) due at 5:30 pm for any signs of revival in the economy, which is staring at its worst pace of annual expansion since the 2008-09 global financial crisis. Many economists expect GDP growth to pick up to 4.7 per cent in October-December, from 4.5 per cent in the previous quarter.
On Thursday, the S&P BSE Sensex index had ended 143.30 points – or 0.36 per cent – lower at 39,745.66 and broader NSE Nifty benchmark settled at 11,633.30, down 45.20 points – or 0.39 per cent – from the previous close, declining for the fifth session in a row.
Top losers on the 50-scrip benchmark index were Vedanta, Tata Motors, Tata Steel, Tech Mahindra, Yes Bank, Hindalco and JSW Steel, down between 5 per cent and 12 per cent each.
ITC was the only Nifty-50 stock to buck the bloodbath on the Street, with gains of 0.3 per cent.
The BSE market breadth overwhelmingly favored the bears; out of 2,546 stocks traded on the BSE, there were 368 advancing stocks as against 2,036 declines.