India Stocks Rebound After Worst Day as Volatility Hits Record
Equities swung between gains and losses, as bargain-hunting by some investors was overshadowed by the economic concerns
(Bloomberg) -- Indian stocks rebounded in a volatile session, following a record fall on Monday triggered by a nationwide lockdown.
The S&P BSE Sensex Index closed up 2.7% at 26,674.03, aftering advancing as much as 5.7%, with the NSE Nifty 50 Index rising 2.5% for the day. Finance Minister Nirmala Sitharaman’s speech in the last hour of trading failed to excite investors due to a lack of relief measures for the economy amid the pandemic. Investors will now turn their attention to the prime minister’s speech later today.
Swings on India’s benchmark stock gauge spiked to a record high on Tuesday, with Sensex’s 10-day realized volatility hitting a record 106%. Average trading volumes for the Sensex were about 46% more than the 30-day average at the close.
Lockdown
Prime Minister Narendra Modi and state leaders over the weekend imposed an almost complete lockdown, which will probably worsen an economy already growing at its slowest pace in more than a decade. India has 468 virus cases so far, including nine deaths. But experts say the country could be on the same trajectory as Italy, where the outbreak quickly escalated, causing hospitals to overflow.
Read more: World’s Biggest Lockdown Prompts Tycoons to Seek India Rate Cuts
Oxford Economics has slashed India’s growth forecast for January to April to 3%, a number not seen even during the worst of the global financial crisis, even as the government weighs the possibility of a fiscal stimulus to support the economy. Meanwhile, the central bank last week announced measures to boost liquidity while holding back from following global peers with a rate cut.
In an effort to support the domestic market, the Securities and Exchange Board of India has lowered the compliance burden on market participants, including extending risk management framework deadlines for mutual funds. The regulator last week raised margin requirements and capped derivatives exposure for a month in a bid to subdue market volatility.
Foreign investors have sold $6.7 billion worth of Indian equities in March, on track for a record monthly withdrawal, according to data compiled by Bloomberg dating back to 1999.
Strategist Views
“It’s a great time to pick up bargains in markets like India,” Mark Mobius, co-founder and partner at Mobius Capital Partners LLP, said in an interview with Bloomberg Television. “Many companies around the world, not only in India, are not going to be harmed that much by what is happening now.”
“Everyone is waiting for stability in stock prices,” said Deven Choksey, who oversees investment and research as managing director at KR Choksey Securities Pvt in Mumbai. “Market players are not participating as per normal.”
The Numbers
- Fifteen of the 19 sector sub-indexes compiled by BSE Ltd. advanced, led by a gauge of IT stocks.
- Infosys Ltd. rose the most on the Sensex index, up 12%, and was the biggest boost to the benchmark.
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