Weekly Wrap: Investors Lose Rs 15 Lakh Crore As Sensex, Nifty Log Worst Week In Nearly 11 Years
Indian equity indices witnessed their worst weekly rout since 2009.
India’s equity investors lost more than Rs 15 lakh crore as the benchmark indices witnessed their worst weekly rout since 2009, triggered by the novel coronavirus outbreak.
The Sensex and the Nifty 50 tumbled more than 9 percent this week to close at 34,103.48 and 9,955.20, respectively. That’s the fourth straight week of losses, the longest stretch since August 2019. Early on Friday, the Nifty 50 had tumbled 10 percent to hit the lower circuit, triggering a 45-minute trading halt for the first time since May 2009. On resuming trade, however, the benchmark indices remained volatile through the day and closed nearly 4 percent higher.
A day before, the Indian indices had tumbled more than 20 percent from their January peaks to enter the bear territory, joining the global peers in their worst selloff since 2008 crisis, as the spreading pandemic Covid-19 threatens to stall economic growth. A price war in the crude oil market has only worsened the situation.
India’s health ministry said there had been 82 coronavirus cases in the country, including 17 foreign nationals. Of these, three have been cured and two died. A 76-year-old man from Karnataka and a 68-year-old woman from Delhi, who had underlying health conditions, died of the bug.
The rising cases of infection and its impact on the stock market, however, has left market veterans divided over the current situation. While some said it’s the best time for investors to buy, a few others pointed out that the economic impact of the outbreak would be very huge.
“It’s a good time to invest, provided one has a minimum investment horizon of five years and the temperament to see volatility,” Rajeev Thakkar, chief investment officer of PPFAS Mutual Fund, said.
Atul Kumar, head of equity at Quantum Mutual Fund, too, sees a good time to buy “quality businesses at reasonable prices”. “Many stocks have corrected significantly. This gives a great opportunity to bottom-up investors. Except for central bank action, a lot of other factors pulling down the markets are transitionary and may reverse,” Kumar said.
Morgan Stanley’s Ridham Desai, however, sounded a bit cautious. “My view is that in a year we will be a lot higher than where we are today. So this may not be a bad time to start putting cash to work,” he told BloombergQuint in an interview. This, however, has to be done with a clear understanding that the next one month could be “pretty bad”, he said, suggesting that investors shouldn’t go all in.
On the other hand, Seth R. Freeman, senior managing director at GlassRatner Advisory & Capital Group, said it there was a room for further decline and this was a “serious fear environment”.
According to Vinay Khattar, executive vice-president and head of research at Edelweiss Investment, there might be demand shocks, while currently there are supply shocks.
Sectoral Performance
All the 11 sectoral gauges compiled by the NSE ended lower this week, led by the NSE Nifty Media Index’s 16 percent slump.
The broader market, represented by the Nifty 500 Index, dropped 9.9 percent, led by the slump in Future Retail Ltd., Welspun Corp Ltd. and Indiabulls Housing Finance Ltd.
How The Currencies Performed
The Indian rupee weakened for the fourth straight week against the U.S. dollar. The home unit depreciated 0.17 percent this week to close at 73.91 against the greenback. The local legal tender had hit an all-time low at 74.50 early on Friday, but pared the losses eventually.