Markets Saw Highest Intraday Loss After M-Cap Fell By Rs 11 Lakh Crore

Mumbai, 12 March 2020: Indian equity markets went on a free-fall on Thursday as investors pressed and held the 'sell' button after the World Health Organisation (WHO) declared the novel coronavirus outbreak a "pandemic" and the United States suspended travel from Europe. The carnage on the Dalal Street on Thursday eroded investor wealth worth Rs 11 lakh crore. Overall, the Indian benchmark indices S&P Sensex and Nifty both slipped over 9 per cent each in intra-day and posted their biggest one-day fall in absolute terms. 

The slide in the Indian markets is expected to continue even on Friday, the last trading day of the week as US markets continues to bleed profusely in its Thursday morning session.  The trading on Wall Street's three main indexes was halted moments after the opening bell on Thursday as the S&P 500 slipped 7 per cent, setting off an automatic 15-minute cutout, for the second time this week.

At 9:35 a.m. Eastern Time, the Dow Jones Industrial Average (DJIA) was down 1,696.31 points, or 7.20 per  cent, at 21,856.91, the S&P 500 was down 192.33 points, or 7.02 per cent, at 2,549.05 and the Nasdaq Composite was down 558.80 points, or 7.03 per cent, at 7,393.25.

Back home, Bombay Stock Exchange (BSE) hit an over 33-month low on Thursday as the benchmark indices crashed over 7 per cent. The total investor wealth (market capitalisation, M-Cap), measured in terms of the cumulative market value of all listed stocks on the BSE, fell by Rs 10.89 trillion to Rs 126 lakh crore, exchange data showed.

The market capitalisation (market-cap) of the BSE-listed firms stood at Rs 137.13 lakh crore, on Wednesday. In the past one month, investors have lost Rs 33.4 lakh crore in market cap. Earlier, on June 30, 2017, the total market-cap of all BSE listed companies stood at Rs 125.96 Lakh crore.

The S&P BSE Sensex hit an intra-day low of 32,493, down 8.98 per cent, or 3,204 points in intra-day trade today. The index finally closed at 33,006, has tanked 21 per cent from the level of 41,566 on February 28, 2020 (in a matter of seven trading sessions).

As many as half or 15 stocks from the 30--share S&P BSE Sensex have seen their market-cap decline by more than 20 per cent in the last one month. 

Joseph Thomas, Head of Research, Emkay Wealth Management said, “The equity indexes slumped by almost 8 per cent on yet another day of sell off triggered by the deadly cocktail of the pandemic and the rising fears of a slowdown in global as well as domestic growth. Needless to say, those who have been into their investment plan in a phased manner would also be surprised but relatively less affected due to deferred commitments over longer time span. A time eminently suited for building portfolios for the longer tenure”.

The US has also put travel ban on European countries except UK as the Coronavirus cases are rising rapidly in the country. Siddharth Mehta, Founder & CIO, Bay Capital said, “What is uncertain is how and when this is likely to be contained. The US looks like the next place where a spike is to be anticipated and this does not augur well for sentiment in financial markets. What is also uncertain is if indeed there might be a 2nd wave of the outbreak in some places as the extreme public health measures are pulled back (notably in China)”.

Further suspension of all visas by India except for few categories till 15th April 2020 to prevent the spread of virus and unabated selling by foreign portfolio investors (FPIs) also dented the sentiments. 

Adopting a cautious approach amid the worldwide outbreak of the new coronavirus (Covid-19), FPIs have already pulled out a net Rs 32,777 crore ($4.5 billion) from the Indian capital markets in the past twelve trading sessions.

As per latest depositories data, FPIs have pulled out Rs 29,262 crore ($4.02 billion) from the equity segment between February 24 and March 9, 2020. While, on Wednesday, March 11, FPIs sold net amount of Rs 3,515 crore ($475 million), the stock exchange data show. This translates into a total net outflow of Rs 32,777 crore during the period. 

As many as 217 stocks from the broader BSE500 index (43 per cent), including 14 stocks from the benchmark S&P Sensex, hit their respective 52-week lows on Thursday. Of these, as many as 25 stocks are from the banking sector, 15 from financial including non-banking finance company and housing finance companies (HFCs). Fifteen stocks are from capital goods sector followed by 11 each from information technology (IT) and power sectors, 10 from chemicals and 8 from textiles sector.