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Coronavirus drives the market sentiment with near - 5% slide of equity markets

Tue, Mar 31, 2020, 11:41 AM
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  • Coronavirus drives the market sentiment with near-5% slide of equity markets

  • Aamar Deo Singh, Head Advisory, Angel Broking Ltd

Globally, coronavirus is wreaking havoc with an exponential rise of cases. To date, the pandemic has affected more than 700,000 people with deaths crossing the 30,000-mark. Its pressure can also be seen on the stock markets amid massive selloff across the globe. A number of factors are driving the markets downwards including bearish investor sentiment, weak output, and asymmetric financial measures. Today, Nifty 50 was also down 4.48% while Sensex fell by 4.61%.

Markets open lower following the global cues:

Taking cues from global markets, Sensex today opened 530 points lower and Nifty also began the week below 8,400 points. Nifty tried to recover from the lows during initial hours, however, the pullback soon faded because of selling pressure around the 8,600 mark. It remained under pressure thereafter. Sensex, on the other hand, largely traded sideways and shed around 840 points more by the closing bell.

Coronavirus Cases Grip the Investors:

Last week, we had seen a pullback markets for multiple days driven by hope of economic stimulus and the containment measures. However, the coronavirus cases continue to increase exponentially as there has not been much relief. They have now completely gripped the market as it is now not reacting to other developments. The domestic market is also continuing to trade with higher volatility in the short term. VIX India, a key marker of volatility that generally trades below 20 points, has increased to 71.5 points.

Selloff in banking stocks drives the trend:

The BFSI players emerged amongst the most underperforming names in today’s session. At NSE, Bajaj Finance fell by 11.81%, HDFC by 11.13%, HDFC Bank by 8.05%, ICICI Bank by 7.78%, and Kotak Bank by 7.53%. Overall, Nifty Bank corrected by almost 6%. The auto sector, which has already been under pressure since quite some time now, was also seen taking a heavy beating. At BSE, M&M fell by 7.46%, Maruti Suzuki fell by 6.56%, and Hero MotoCorp closed 6.53% lower.

Avoid Being Aggressive:

At present, the market is uncertain and the true impact of COVID is unknown. The containment measures have slowed down the spread of virus, however, the number of cases still continue to rise. COVID-19 is now by and large the only vector driving the market. At such volatile times, it is advised that one needs at best to avoid aggressive trades and have a proper risk management and exit strategy. 

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