INSUBCONTINENT EXCLUSIVE:
The stock market extended losses to the fourth day on Wednesday as foreign investors stepped up sale of Indian shares amid growing aversion
to riskier assets in the wake of rapid global spread of the Covid-19 virus.
The Sensex closed below 40,000 for the first time since October,
mirroring the panic in rest of Asia and Europe on worries that Covid-19’s impact on global economy would be worse than anticipated.
The
Sensex ended at 39,888.96, down 392 points, while the Nifty ended down 119.40 points at 11,678.50
The indices have fallen 3.5 per cent in past four trading sessions.
FPIs offloaded shares worth Rs 3,337 crore on Wednesday, taking their
total sales to over Rs 6,900 crore in past three days
Had domestic institutions not bought shares worth Rs 2,786 crore, the losses would have been sharper.
The Volatility Index (VIX) surged 8
per cent to 18.3, highlighting increasing nervousness.
The Nifty and Sensex have now entered a bearish trend on technical charts
Both indices are below their respective 200-day simple moving average, which is considered a major support level.
Piyush Garg, CIO at ICICI
Securities, said the Nifty is expected to bounce back from the 11,600-11,700 levels if global markets stabilise
“If the global rout continues, then 11,000 could be the next level,” he said.
On Wednesday, the Stoxx Europe 600 index sank nearly 3 per
cent — recording its longest losing streak since July
South Korea’s Kospi and Singapore’s Straits Times index lost 1.3 per cent each, leading the losses among Asian markets
The Dow Jones was up 0.45 per cent in early trade.
“The magnitude and nature of the recent market drops will fuel concerns about technical
dislocations, possibly triggering more selling,” said Mohamed El-Erian, chief economic adviser at Allianz, in a tweet.
Worries about a
global pandemic escalated after Covid-19 infections were reported from several countries in Europe and the Middle East
Austria, Croatia and Switzerland have reported cases following the recent outbreak in Italy, according to news reports
In Iran, 140 people have been infected, while the total number of cases in South Korea has climbed to more than 1,200
The virus, which erupted in China, has claimed over 2,000 lives there.
Jefferies said reports of infections from South Korea, Italy and Iran
point to the risk of a global pandemic that, if not handled correctly, could swamp hospitals
The brokerage believes that given the flow of Chinese, Korean and Iranian nationals into North America, a large US community-based outbreak
“If not managed correctly, this could significantly rattle markets,” said Jefferies.
Money managers believe Indian stocks will continue
to see outflows if the global market rout does not end, even though the country has been relatively unaffected by the outbreak.
“The
market fall is mainly because of the Covid-19 outbreak
Because of the scare about the spread beyond China, there are concerns that it may affect growth in the near term,” said Mahesh Patil,
co-chief investment officer at Aditya Birla Sun Life Mutual Fund.
“Indian market valuations had run up in the past six months in the
backdrop of global liquidity,” Patil pointed out.
