Indian Markets Shed Over 23% As FPIs Pull Out Over $8 Billion In March

Mumbai, April 1: March  proved to be a month of mayhem for the Indian stock markets. Fears of rising cases of coronavirus threatened to push the global economy into a recessionary phase and market players including Foreign Portfolio Investors (FPIs) resorted to relentless selling. As a result investors lost wealth worth more than Rs 30 lakh crore ($399 billion) in a single month.

The S&P BSE Sensex and the Nifty50 fell about 23 per cent each to post their worst fall since October 2008. Investors lost more than Rs 33 lakh crore in a single month as the average market capitalisation of BSE-listed companies fell from Rs 146.87 lakh crore on Feb 28 to Rs 113.48 lakh crore on March 31.

The large part of the fall was led by consistent selling by FPIs who have pulled out more than Rs 62,000 crore ($8.27 billion) from Indian equity markets from the cash segment in March, provisional data showed.

The market movements have become erratic post the outbreak of COVID-19 and after most part of the world have undergone lockdown. A day after logging healthy gains, market benchmarks - Sensex and Nifty were back in the negative territory on April 1, tracking weak global cues.

The 30-share Sensex ended 1,203 points, or 4.08 per cent, down at 28,265.31 and the Nifty settled 344 points, or 4 per cent, lower at 8,253.80 on Wednesday. The BSE Midcap and Smallcap indices remained better off than the benchmarks, down 2.18 per cent and 1.06 per cent, respectively. All sectoral indices ended in the red on BSE, with the BSE Bankex, IT and Tech falling over 5 per cent each.

Vinod Nair, Head of Research at Geojit Financial Services said, “The first day of the financial year started off on a negative note, impacted by the negative global markets and also domestic uncertainties with regards to bank stressed assets and auto numbers. FIIs have net sold around Rs 62,000 crore in equity in March and with virus infections increasing, markets are anticipating a worsening of the situation."

India declared a lockdown throughout the country on March 24, a week ago. Since then the benchmark indices have posted gains of around 8 per cent with Sensex up by 2,285 points and Nifty up by 644 points as on Wednesday.

Commenting on market movements,  Ajit Mishra, VP - Research, Religare Broking said, “Markets witnessed a sharp decline as participants took note of a sudden surge in the coronavirus numbers in India and weak auto sales numbers. Besides, feeble global cues, combined with continuous FPI outflows were also weighing on the sentiments”. 

With 21 days of lockdown in India and a complete halt on economic activity across the globe due to rising cases of COVID-19 have fuelled fears of an economic recession, one of its worst, seen in the last 150 years. Further, in the near term, there are no fresh positive triggers, which can boost investor sentiments. 

Mishra said, “We reiterate our cautious view on markets and suggest keeping extra care for stock selection and risk management.”

In tandem with the global markets, D-Street witnessed one of its worst month in the last 12 years. More than 90 per cent of the Nifty50 stocks hit a fresh 52-week low or multi-year lows in the same period.

However, the bigger carnage was seen in individual stocks. As many as 43 stocks in the BSE500 fell over 50 per cent in the month of March.