Indian markets have come under pressure in the last four sessions with their global peers gauging the impact of Coronavirus on world growth after fresh cases of infections and deaths were reported outside China. While benchmark Sensex has lost 1,435 points, Nifty has fallen 447 points since February 19. Sensex which stood at 41,323 on February 19 closed at 39,888 today. The correction in stock market has erased investors' wealth by Rs 5.49 lakh crore during the past four sessions.
Sensex which had gained nearly 0.16% or 70 points on an year-to-date basis till February 19 has entered the red zone due to concerns over global growth in the wake of rising cases of Coronavirus outside China.
The benchmark index has now fallen 3.31% or 1,364.78 points since January 1. Similarly, Nifty declined 489 points or 4.03% since the beginning of this year.
Foreign investors are also seeking investment in safe haven assets such as gold and government securities and have been net sellers in Indian market since February 19.
Till yesterday, FIIs sold shares worth Rs 2,171 crore in Indian market since January 19.
Siddhartha Khemka, Head, Retail Research at Motilal Oswal Financial Services said, "With the outbreak spreading to other countries, investors are increasingly concerned that there could be a much larger impact on the global economy. Investors are also cautious ahead of the December quarter GDP data on Friday as well the February monthly F&O expiry on Thursday. Markets are expected to remain volatile in the near term given the F&O expiry and spread of coronavirus outside China."
With market heading downward on global growth fears, market experts say traders should focus on stock selection.
Ajit Mishra, VP - Research, Religare Broking said, "The recent global developments indicate that the coronavirus could escalate into a pandemic, which is taking a toll on markets across the globe including ours. Nifty has breached its critical support of 11,700 and settled below the same as well. We thus advise continuing with the "sell on rise" approach in the index. Stocks, on the other hand, are seeing erratic swings and the schedule derivative expiry of the February month contract would further add to the volatility. Traders should focus more on stock selection and risk management until markets stabilise."
Death toll in China has now crossed 2,700 while those infected are approaching 80,000 though new cases in China are falling, Chinese government said. With the global market crash percolating into Indian indices, experts say buying strategies should be devised during the correction phase.
Shrikant Chouhan, Senior Vice-President, Equity Technical Research at Kotak Securities said, "Global markets virtually collapsed on Wednesday and Indian markets too felt the heat. The main reason behind such a big crash was the announcement from Centers of Disease Control and Prevention (CDC), which warned of a broader disruption if the Corona virus threat spreads to the US. Mounting worries triggered a sharp fall across the asset classes namely gold, crude and even the 3-year Gsec. Technically, the Nifty has come down a lot in the short term. Nifty can see a major bounce back if it arrests at 11,600 level, which is more likely. Major support exists at 11600, but if the Nifty slips below this, then the medium term trend could be gloomy."
France's CAC 40 lost 0.6% to 5,644.47 in early trading, while Germany's DAX fell 1% to 12,661.83. Britain's FTSE 100 lost 0.6% to 6,976.95 today. Japan's benchmark Nikkei 225 declined 0.8% to finish at 22,426.19, while Australia's S&P/ASX 200 dipped2.3% to 6,708.10.South Korea's Kospi lost1% to 2,076.77. Hong Kong's Hang Seng declined 0.8% to 26,674.67. The Shanghai Composite fell 0.8% to 2,987.93.
On Wall Street, S&P 500 has lost 7.6% in the last four days since hitting a record high last Wednesday. The Dow Jones Industrial Average dropped 879 points, for a two-day loss of 1,911 points.
The viral outbreak that originated in China has now infected more than 80,000 people globally, with more cases being reported in Europe and the Middle East. The majority of cases and deaths remain centered in China, but the rapid spread to other parts of the world has spooked markets and raised fears that it will hurt the global economy.
By Aseem Thapliyal