Indian stock markets today suffered its biggest one-day selloff as several states went into lockdown to curb the spread of coronavirus cases in the country. Within less than one hour of market opening, trading on BSE and NSE had to halted as Sensex hit the 10% lower circuit breaker. After trading resumed, the Sensex extended losses, dragged down by financials. The rupee also weakened past 76 level per dollar for the first time.
The Sensex ended at 25,981, down 3,934 points, while Nifty fell 13% to 7,610 - their biggest one-day fall ever.
Over the weekend in India, the virus drove several companies to shut operations and the government sent states into lockdown, bringing normal life to a grinding halt. As of today, India had registered over 400 cases of coronavirus.
Taking note of the excessive market volatility amid the coronavirus fear, stock market regulator Sebi on Friday announced measures to curb speculative activities.
Broader Asian and European markets were also sharply lower today as a rising lockdowns threatened to overwhelm policymakers' frantic efforts to cushion what is likely to be a deep global recession.
Financial stocks led the rout in Indian markets today. Among financials, HDFC Bank slumped 13%, ICICI Bank 18%, IndusInd Bank 23%, Bajaj Finance 24% and Axis Bank 28%.
The auto sector also took a severe beating as companies halted production across the board. Bajaj Auto shares tanked 14% while Maruti Suzuki shares slumped 17%.
Here is what analysts say:
Ajit Mishra, VP - Research, Religare Broking Ltd.
"After a smart rally on Friday, the selling pressure resumed in the Indian markets that too with greater intensity as the benchmark indices recorded its biggest single-day decline. The wider spread of coronavirus cases in India and lockdown in major cities impacted sentiments. Further, the global cues too remained unsupportive.
The rising number of cases of coronavirus has definitely impacted economic activity across the globe. On the domestic front as well increase in number of cases has forced the government to lockdown major cities impacting economic activity. Going forward, we expect the markets would continue to remain volatile as increase in number of cases in India would lead to selling pressure. Meanwhile, market participants would pin their hopes on stimulus package from the government to reduce the economic impact of coronavirus."
S Ranganathan, Head of Research at LKP Securities
''The coronavirus interplay with health and markets brought the Dalal street to its knees today as foreign investors raised cash across emerging markets. The COVID-19 proved to be a 3 in 1 shock across demand, supply and markets as lockdowns and quarantines weighed heavily in financial markets''.
Vinod Nair, Head of Research at Geojit Financial Services
"With the spread of Covid-19 continuing unabated and the fears of global recession increasing, the Indian markets crashed. The markets closed much lower in percentage terms compared to the Asian and European markets, which indicated increased uncertainty regarding the spread of the virus in India after the government indicated that the country was in a crucial phase in its fight against the virus. Further measures and lockdowns are expected after manufacturing companies indicated that they would shut down their facilities, which would have an overall impact on business activity and market confidence."
Manish Hathiramani, a technical analyst
"After a gap-down this morning, the crucial level to watch out for was 7,820 which was around the immediate low recorded by the Nifty on 19 March 2020. Post the circuit breaker, the Nifty triggered that level with ease and on the back of very good volumes indicating a strong bearish impulse. The breaching of this point can result in the Nifty sliding all the way down to 7,360 and then 7,200. This may not be a one way move as we have the F&O expiry this week on 26th March 2020, but overall we could expect these levels to be achieved."