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Coronavirus Impact: Stock market investors lose Rs 10 lakh crore in 6 trading sessions

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Investor wealth on Dalal Street tumbled by a whopping Rs 10 lakh crore in six trading sessions as concerns over coronavirus becoming a pandemic made investors flee riskier assets. Market capitalisation of BSE-listed firms declined to Rs 148.53 lakh crore in Friday’s early trade against Rs 158.71 lakh crore on February 19.

The benchmark BSE Sensex tumbled 2,661 points to 38,661 from 41,323 during the same period. The BSE Sensex cracked 1,000 points, or 2.52 per cent, to 38,745 in Friday’s early trade following global market sell off.

On Wall Street, Dow Jones Industrial Average tanked 1,190.95, or 4.42 per cent to 25,766.64 on Thursday, while Nasdaq declined 414.3 points, or 4.61 per cent to 8,566.48, and S-P 500 settled 137.63 points, or 4.42 percent, lower at 2,978.76. Fresh cases of Covid-19 are now being reported outside China, with South Korea, Italy and Iran emerging as new epicenters.

US officials on Wednesday warned Americans to prepare for more virus cases. Death toll from the virus outbreak in China’s Hubei stood at 2,682 as of February 27.

The death toll in Italy, Europe’s worst-hit country, rose to 17 on Thursday and the number of people who tested positive for the illness increased by more than 200 to 650.

Germany has about 27 cases, France around 18 and Spain 15. South Korea, which has the most cases outside China, reported 256 new infections on Friday, bringing the total number of infected in the country to 2,022. According to Centrum Broking, India sources a considerable share of capital and intermediate goods from China, and the industrial clampdown in Chinese province is most likely to impact the domestic industrial production and consumption. “The ideal time for a shipment to move from the Chinese factory to the Indian factory is 36 days.

Hence, any disruptions in the supply chain would be in effect after the estimated time slack.

The ramification of such a virus infecting the production hub and trading partner of the world could have a cascading effect on the global supply chain,” the brokerage house said.

The selloff is so severe in the market and is evident from the fact that none of the stock in the Sensex pack delivered positive returns to investors during February 19-28.

Shares of the ONGC declined the most (12 per cent) during the period.

Reliance Industries, Maruti Suzuki, Hero MotoCorp, Mahindra - Mahindra, Larsen - Toubro, HCL Technologies and ICICI Bank also retreated over 5 per cent. Jay Anand Thakkar, CMT Assistant Vice President-Equity Research, Anand Rathi Shares and Stock Brokers said, “The ongoing selloff is in line with global selloff.

It is a risk off market right now, which is why gold prices have also surged in the recent past.

Global market is in panic mode with the spread of coronavirus.

Till the market doesn’t see any relief from the virus, we may see sideways to negative movement going forward.” Sector-wise, the BSE Metal index tumbled 13 per cent during February 19-27.

BSE Oil - Gas, Auto, Realty, Capital Goods, IT, TECk, Power, Consumer Durables, Healthcare, Telecom, FMCG and Bankex also lost between 4-11 per cent. In an interaction with ETNow, Marc Faber, Editor, Gloom, Boom - Doom Report said, “Investors have to understand that we are in an 11th year of bull market, which started on March 6, 2009.

Markets by any standards, even in India are very expensive.

The so-called bluechips or growth stocks are very expensive based on a price to earnings ratio and especially on a price to sales ratio.

Market-cap of world’s stock markets as a percentage of the economy of the global economy are all very high.” He further added that coronavirus was the catalyst to a decline but the deeper reason for a decline is that by early February, markets around the world were overbought, expensive and disregarded a global economy that had begun to slow down in 2019.




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