On Monday, while overseas investors sold shares worth $186 million, local investors pumped in $156.6 million, provisional data on bourses showed.
Indian equities bucked the trend seen in other Asian markets to close in the red on Monday, after two new cases of Covid-19 were reported in Telengana and New Delhi.
The markets gave up initial gains on Monday after new cases were reported raising doubts over the containment of the deadly virus. After rising 786 points in early trade, the Sensex closed 153.27 points down ending the day at 38,144 points. The benchmark extended its fall for the seventh day and marked its longest losing streak so far in 2020. The index has lost about 8% in the last seven session while the broader Nifty50 closed 69 points lower at 11,132.75 points. Investor wealth to the tune of Rs 12.9 lakh crore has been wiped out during the last seven sessions.
Investors are questioning the pace of recovery as the virus is showing no sign of getting contained. Tanvee Gupta Jain, economist, UBS Securities India, said, “Covid-19 outbreak and its consequent impact on global growth has led investors to question the likely pace of recovery, if any, this year. We believe a weaker China and global growth, and disruptions along the supply chain are likely to have some adverse impact on India’s growth in the March quarter of 2020. For instance, sectors such as electronics, pharma, automobiles etc, could see supply disruptions in the value chain.”
The slide in Indian equities comes at a time when the global markets showed some kind of resilience on hopes that global central banks would take some actions to stabilise the financial markets. It is noteworthy that other Asian markets such as Shanghai Composite, Hang Seng and Kospi gained in Monday’s trade with the Shanghai Composite being the best with 3.2% gains.
Meanwhile, foreign portfolio investors (FPIs) continued to offload Indian equities for the sixth day in a row, selling stocks worth $2.01 billion even as the domestic institutional investors (DII) bought shares worth $2.4 billion during the same period. On Monday, while overseas investors sold shares worth $186 million, local investors pumped in $156.6 million, provisional data on bourses showed.
AK Prabhakar, head of research at IDBI Capital Market Services, said, “Monday’s fall has more to do with India than the global sell-off. Even heavy buying from institutional investors was unable to pull back the indices and arrest the fall.”
The broader market, which has been tilted towards sellers over the past two years saw 1,515 stocks on BSE closing the day in the red against 954 stocks gaining in the trade. According to ASK Wealth Advisors Research Team, “Indian markets have been relatively resilient till recently. The FPI selling in both equities and bonds is likely to reverse once the disease outbreak trend stabilises.”
On Monday, 16 of the 19 sectoral indices compiled by BSE ended in the red with BSE Metal and BSE Oil falling 2% each.