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Sensex plunges 392 points: Coronavirus & what else is making D-Street jittery

Broader market indices were trading in-line with their headline peers.

, ETMarkets.com|
Last Updated: Feb 26, 2020, 03.37 PM IST
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BSE-1---BCCL
Investors have already lost over Rs 5 lakh crore in market capitalisation on BSE in four trading sessions.
Coronavirus jitters, F&O expiry, and expectations of another quarter of subdued GDP growth are some of the factors weighing on the domestic market in Wednesday's session.

A depressed opening for European markets and weakness in Dow futures also hit sentiment back home.

BSE flagship Sensex ended 392 points or 0.97 per cent at 39,889 while its NSE counterpart Nifty settled at 11,679, down 119 points or 1.01 per cent.

The market looks to end in the red for the fourth day in a row. Investors have lost over Rs 5 lakh crore in market capitalisation on BSE in four trading sessions.

Here are the top factors dragging D-Street lower:

Coronavirus spreading legs
Coronavirus is moving towards becoming a pandemic as it is swiftly spreading to countries beyond China. The US Centers for Disease Control and Prevention also urged Americans to prepare, saying that while the immediate risk there was low, the global situation suggested a pandemic was likely.

This dampened sentiments on the street pulling markets lower. Asia also reported hundreds of new coronavirus cases on Wednesday, including the first US soldier to be infected. Adding to a growing sense that a rapid spread of the virus in more places is inevitable, a top World Health Organization (WHO) official urged that preparations be made now.

The disease has infected about 80,000 people and killed more than 2,700, the vast majority in China.

Investors across the globe are worried over the long-term impact of the deadly coronavirus on global growth.

European markets tumble
After US and Asian stocks closed sharply down, European markets also tumbled in the opening trade. DAX and CAC were down by over 2 per cent while FTSE traded 1.8 per cent lower. The US market is staring at yet another opening in the red as Dow futures traded 0.79 per cent lower ar 26,903.

The S&P 500 and the Dow Jones Industrial Average both shed more than 3 per cent on Tuesday in their fourth straight session of losses.

That led MSCI's broadest index of Asia-Pacific shares outside Japan down 1.1 per cent. Japan was among the worst-performing market in the region, weighed by growing concerns the virus could force the cancellation of the Tokyo Olympics.

In the past four trading sessions, about $3 trillion has been wiped off the value of the MSCI World, a market cap-weighted stock market index of 1,644 stocks globally.

F&O expiry
The fourth day of fall might also had forced traders to cut trades ahead of F&O expiry. Data showed, market-wide rollovers stood at 49 per cent till Tuesday, which were in line with the average rollovers of 48 per cent in the last three series. Nifty rollover stood at 45 per cent which was higher average rollovers of 36 per cent in the last three series.

Volatility also rose ahead of the expiry. India VIX, the measure of volatility in the market, rose 9.24 per cent to 18.46.

Disappointing GDP data in sight?
The expectation of another subdued quarter of GDP growth rate is also weighing on the markets.

GDP growth is likely to show a marginal improvement to 4.6 per cent from 4.5 per cent in the previous quarter, said Nirmal Bang Institutional Equities. This brokerage expects GVA growth at 4.4 per cent, marginally above 4.3 per cent reported for the September quarter.

December quarter GDP numbers will be released on Friday.

FIIs on a selling spree
Foreign investors are also withdrawing money from domestic markets in large amounts. Net-net, foreign portfolio investors (FPIs) were sellers of domestic stocks to the tune of Rs 2,315 crore on Tuesday, data available with NSE suggested. DIIs were net buyers to the tune of Rs 1,565 crore, data suggests.

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