It was Monday mayhem for the Indian bourses, and the worst day in history as BSE Sensex and NSE Nifty saw a free fall. Once again trading came to a halt for 45 minutes as the Sensex hit a lower circuit limit of 10 per cent. However, the sell-off continued even after trading resumed. The rising COVID-19 cases, across the globe as well as in India, has spooked investors, as the mood of the markets continued to be on negative side as the virus spread has deepened.
“Indian markets corrected sharply on Monday. The main indices, in fact, hit the lower circuit in the morning session and trading was halted for 45 minutes. But selling resumed once the markets opened,” says Deepak Jasani, Head Retail Research, HDFC Securities.
“Indian markets were worst impacted as the rapidly spreading coronavirus pandemic sent major states including the country's capital into a lockdown amid increasing fears that outbreak could bring world economies to a grinding halt. The Organisation for Economic Co-operation and Development (OECD) has warned that the world will take years to recover from the coronavirus pandemic,” continues Jasani.
The S&P BSE Sensex hit a low of 25,880.83 down by 4,035.13 points during intraday as compared to the previous closing of 29,915.96 on March 20. Whereas, the NSE Nifty 50 hit a low of 7,583.6 during intraday. Sensex closed at 25,981.24 down by 3,934.72 points or 13.15 per cent and Nifty 50 index ended at 7,610.25 down by 1,135.20 points or 12.7 per cent. The broader market followed the benchmark with Nifty Next 50/Nifty Midcap 50 down by 11.25 per cent and 14.56 per cent respectively.
Further all the sectors were in red including Banks being the biggest loser down by 16.24 per cent. Nifty Auto was down by 14.17 per cent, while Pharma plunged 7 per cent.
"After weeks of relative placidity, financial markets reacted and tumbled at an unprecedented pace, wiping out almost 35 per cent in a span of 3 weeks. We believe that this is not yet done with and recovery will take a long time with lingering pain on the economy and investors. India was already on a sticky wicket with a rapidly slowing economy prior to the outbreak. Hence, investors are pinning their hope entirely on the monetary and fiscal measures which the government might take in the next few weeks,” says Prasanna Pathak, Head - Equity & Fund Manager.
As per market experts, globally stocks came under pressure despite massive stimulus efforts even as the US lawmakers failed to agree on a trillion-dollar emergency package to help the reeling American economy. “Globally, we have already seen unprecedented measures on monetary as well as fiscal front and in some places, they seem to have exhausted all ammunition. RBI and the government, so far, supposedly kept the gunpowder dry for use at the right time. We expect some action on this front, which may provide some relief rally,” says Taurus Mutual Fund.
Market experts suggest investors to look at the good stocks from the long-term perspective and to only accumulate good fundamental and quality stocks over the next few weeks and months. “The steep correction due to the coronavirus impact has made many good stocks cheaper and attractive. While it is very difficult to predict the bottom of the market, it always rewards investors in the long term who benefit from such sharp fall. Markets may continue to fall in the near term and that is the time to start becoming greedy. We suggest accumulating 10-15 per cent of overall allocation on a gradual basis,” says Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.