Reversing trend after two straight sessions of gain, benchmarks Sensex and Nifty closed 4% lower on Wednesday as investors panicked over the rising fear of recession sparked by the coronavirus pandemic.
Tracking bearish trend from global indices, the 30-share index BSE Sensex ended 1,203 points lower at 28,265 and 50-share barometer NSE Nifty closed 334 points lower at 8,263.
Overall 26 out of 30 stocks on Sensex and 46 of 50 stocks on Nifty closed in the red. All the sector-based indices closed in red, with Nifty banking, financials and private bank dropping 4% each, followed by a 3.5% drop in media and FMCG, and 3.2% decline in PSU Bank.
The market traded sharply in red, following fall in global counterparts after the opening bell. Earlier today, Sensex opened 250 points lower at 29,100 and NSE Nifty shed 85 points to 8,509.
Vinod Nair, Head of Research at Geojit Financial Services said," The first day of the financial year started off on a negative note, impacted by the negative global markets and also domestic uncertainties in regard to Bank Stressed assets and Auto numbers. FIIs have net sold around Rs 62,000 crore in Equity in March and with virus infections increasing, markets are anticipating a worsening of the situation."
Globally indices traded in red today, as sentiment turned risk-averse amid the rising cases of COVID-19 and tightened lockdowns across the world to combat the virus spread.
SGX Nifty traded 3.5% or 300 points lower after falling marginally at the opening bell, while Nikkei led losses with 4% fall. Meanwhile, Kospi, Strait Times and Hang Seng fell 2% each.
European indices also opened sharply lower on Wednesday, tracking weak cues from Asian counterparts. While FTSE and CAC index dropped 4% each, DAX was trading 3.5% lower.
US Dow Jones Futures were down 3.4% or 738 points. On Tuesday, Dow Jones Industrial Average fell 1.4%, S&P 500 lost 1.49% and Nasdaq Composite dropped 1%.
Global indices came out of the worst quarter ever experienced due to the coronavirus pandemic. Q1 performance for the US market was the worst ever while Europe saw its worst Q1 in 18 years. Similarly, the 30-share index recorded its biggest quarterly fall of 28.7% in the Jan-March quarter.
Financial markets worldwide have taken a big hit from the pandemic in the last month as investor sentiment remained fragile over the slowed growth of the global economy. Coronavirus is guaranteed to throw the world into recession, and economists are becoming less convinced about the potential for a strong recovery in growth. In March, Sensex and Nifty declined 25%. Since the start of 2020, Sensex, Nifty, BSE Smallcap and Midcap indices have fallen over 31% each.
Compared to Indian benchmark indices, Brazil's Bovespa Index has lost 35%. London's FTSE and Germany's DAX have fallen 26%, followed by 23% drop in Straits Times Index (STI) in Singapore Exchange, 21.7% fall in Dow Jones on Wall Street and 18% fall in Japan's Nikkei.
Gold price also fell over 2% as the dollar firmed but marked the sixth straight quarterly rise on global concerns due to the pandemic. MCX Gold traded 225 points to Rs 42,746 per 10 gm as against its closing of Rs 42,971 per 10 gm.
Spot Gold has risen 3.9% since the beginning of 2020 in commodity markets, to $1,577. Last week, gold prices gained 8.63% at COMEX, whereas the yellow metal was up 7.96% on MCX.
Brent Crude, that currently stands at $22 ber barrel has fallen 67% year-to-date. Last week, WTI crude fell 7.61% and MCX crude was down by 12.33%. Global fuel demand has been sharply cut by travel restrictions due to the coronavirus.
The Indian rupee ended at 74.83 against the US dollar on Tuesday. The money market was shut today on account of annual bank closing.
Expressing views for the near term market outlook, Ajit Mishra, VP - Research, Religare Broking said," Investors' confidence is continuously being impacted due to mounting fear of global recession, rising cases of Covid-19 and weak macros leading to selling in the global markets including India. Further, in the near term, there are no fresh positive triggers which can boost investor sentiments. We reiterate our cautious view on markets and suggest keeping extra care for stock selection and risk management."