India’s Stocks Post Record Losses as Virus Lockdown Kicks In
India’s stock exchanges will remain open despite a lockdown in the country’s financial capital of Mumbai.
(Bloomberg) -- India’s stock indexes posted their worst losses on record, as the world’s second-most populous nation went into a lockdown after the number of coronavirus cases in the country surpassed 400.
The S&P BSE Sensex Index tumbled 13% to 25,981.24 at the 3:30 p.m. close in Mumbai - its biggest one-day drop ever since data going back to 1979 -- while the NSE Nifty 50 Index sank by a similar amount. The gauges triggered a trading halt earlier in the day, after a 10% fall within minutes of the opening bell tripped circuit breaker. The regional MSCI Asia Pacific Index lost 3.1%.
Prime Minister Narendra Modi and state leaders over the weekend imposed an almost-complete lockdown, which will probably worsen an economy already set to slow to an 11-year low. While the spread of the coronavirus pandemic has so far been slow in India, T. Jacob John, the former head of the Indian Council for Medical Research’s Centre for Advanced Research in Virology, warned the virus could spread to as much as 10% of India’s 1.3 billion population.
“The pandemic comes at a time when India was showing some signs of emerging out of a slowdown and this has been a setback,” Shibani Sircar Kurian, head of equity research at Kotak Mahindra Asset Management Co. said by phone. “A prompt announcement of financial and monetary measures can help clam the market nerves.”
Policy makers’ immediate focus is ensuring Indians have cash in hand to buy essentials, the government’s principal economic adviser, Sanjeev Sanyal, said in an interview in New Delhi on Friday.
Economic management of the situation “now depends on the resilience of domestic demand,” ANZ Banking Group Ltd. analysts wrote in a note on Monday. “The ability to support domestic demand with fiscal and monetary accommodation is constrained and most of all, the dysfunctional financial system will restrict the availability of credit for a long time,” they added.
The S&P BSE Sensex Index last week marked its biggest weekly decline since October 2008. The ferocity of India’s sell-off has left equities way below the street’s forecasts. The average 12-month price target for companies in the S&P BSE Sensex Index has fallen less than 3% in March, versus a 32% plunge in the nation’s main stock gauge.
India’s stock exchanges will remain open despite a lockdown in the country’s financial capital of Mumbai, Economic Affairs Secretary Atanu Chakraborty said in an interview.
The nation’s market regulator Friday evening raised margin requirements and capped derivatives exposure. The measures, which will stay in force for a month, are aimed at discouraging traders from aggressively building short positions at a time when volatility in the nation’s equities has spiked to levels last seen in the aftermath of the 2008 financial crisis.
Its central bank last week announced measures to boost liquidity but held back from following global peers with a rate cut. India’s government is considering offering easier loan repayment terms and tax breaks for smaller companies, a person with knowledge of the matter said.
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