D-Street: Biggest one-day selloff as lockdown triggers panic amongst investors:
On Monday, the coronavirus lockdown gripped the D-street as well. Sensex tanked 3,000 points during the early trade, thereby hitting the lower circuit and halting day-trade for about 45 minutes. There was no respite for the markets as the selloff continued even after the trade resumed. By the day’s end, Sensex took a Rs. 1.3-trillion-haircut and closed 3,935 points lower.
Nifty shared Sensex’s pain as it was down 1,135 points by the closing bell. Nifty closed at 7,610 points and is now even below the low of demonetization.
Only one thing can end the market mayhem: COVID containment
There has been a global spike in the COVID-19 cases with over 340,000 confirmed cases and 14,717 deaths. India has fared relatively better in terms of containment with just 415 confirmed cases and 8 deaths. The number of cases in the US jumped sharply beyond 35,000 and 414 deaths despite 1 in 3 Americans being asked to stay at home. Perhaps, good news has come from China where there have been no new local cases for fifth consecutive day – only 39 new imported cases have been registered. It will be critical to see how things pan out over the coming week with strict lockdown imposed across India.
Nifty throbbing could persist:
Despite Nifty’s over 1,100 points nosedive, it seems like selloffs are likely to continue. The market can hit the support levels of 7,350 to 7,500 tomorrow. Some of the worst hit stocks at the Nifty belonged to BFSI sector with Axis Bank falling 27.91%, Bajaj Finserv by 25.86%, and IndusInd Bank by 23.59%. Maruti Suzuki, Tata Motors, and Bajaj Auto also tanked by 16.91%, 14.36%, and 13.68% as they halted production across their manufacturing plants. Power sector was able to somewhat resist the headwind with PowerGrid, GAIL, and Coal India tanking just by 2.7%, 3.47%, and 3.73% in Nifty’s worst trading day.
Foreign Institutional Investors:
The outpour of FIIs in March also does not seem to end. FIIs have already pulled out Rs. 46,165 crores from equities (till 20th March), making this month the worst month since October 2018 vis-à-vis FII investment. Indian markets are, however, seeing a silver lining in the form of DIIs (Domestic Institutional Investors) as they have somewhat cancelled out FII’s market retreat.
US GDP and Manufacturing PMI will give cues:
US GDP and Manufacturing PMI figures will play a decisive role in the future market trajectory. The Federal Bank is pulling all stops to ensure market liquidity and prevent the shortage of dollar funding. It is simultaneously ensuring a smooth functioning of the domestic economy with credit extensions and stimulus packages. However, since the COVID outbreak is deteriorating in the US, only GDP and PMI figures will give us the picture of the ground reality.