Equity investors saw a whopping Rs 11 lakh crore of wealth wiped away on Thursday as the markets capitulated to coronavirus. Several stocks hit multi-year lows as equities tumbled and the Sensex crashed 2929.26 points to close the session down 8.18% at 32,778.14, an over two-year low. The Bank Nifty plummeted 2951.45 points intra-day before ending the day 9.50% lower at 23,971.15.
Foreign portfolio investors (FPIs) who have been on a risk-off mode over the last few weeks have sold stocks worth $5 billion in last 13 consecutive sessions. On Thursday, FPIs sold equities worth a net $469 million, provisional data showed.
UR Bhat, director at Dalton Capital Advisors (India), said the valuation gap between the Indian market and its emerging market peers has somewhat narrowed after the recent fall. “The indices had been gaining earlier, led by only a few stocks. With the recent fall, the broader market valuations have become attractive although the top stocks are still not as attractive,” Bhat said.
The broader Nifty50 tumbled a whopping 950.40 points during the day before closing 8.30% down at a two-and-a-half-year low of 9590.15, as the spread of the novel Covid-19 showed no sign of subsiding and foreign investors continued to take risk off the table. The markets had recovered a bit on Wednesday post Monday’s plunge, however, the sell-off intensified on Thursday after World Health Organization (WHO) declared Covid-19 as a pandemic that had spread to more than 100 countries. The Sensex has crashed 20.4% since the selling by FPIs started. The US equity markets were weak in early Thursday trading with the S&P 500 falling 7% shortly after the morning bell, leading to a halt in trading. European stocks also extended their losses with the FTSE, Dax and CAC falling about 10% each during the day.
Saurabh Mukherjea, founder of Marcellus Investment Managers, told FE that stock markets had corrected sharply in the past too, whether it was during the Lehman crisis or during demonetisation. “The world rarely comes to an end in such situations. Life continues and well-run companies go on to recover smartly. China seems to have passed the worst of the virus outbreak and supplies from China to Indian companies have already resumed this month. Data from the Chinese stock market and the Chinese government show that they have got a grip on the situation.
Therefore, as supplies from China resume to India, the challenges facing the pharma sector and auto sector should get addressed,” he said.
Domestic institutional investors (DIIs) including mutual funds bought shares worth $527 million on Thursday, provisional data on exchanges showed. Of the 19 sectoral indices compiled by the BSE, all sectors barring healthcare, telecom and consumer durables, plunged to their 52-week lows.