NEW DELHI: As the global markets head towards its worst slide since the 2008 financial crisis over fears of the coronavirus becoming a pandemic, markets experts foresee it as the much-needed correction, which was on the cards to recalibrate valuations that may have become unsustainably high.
“Experience suggests that when we go overboard with our expectations, there is always some consolidation or correction around the corner. The Indian market has been trading at higher valuations in line with global peers and hence a correction was needed. While the entire world was blaming the coronavirus for the erosion of wealth, it was also partly because of the over-valuation,” said a Mumbai-based market analyst.
Jimeet Modi, founder and chief executive officer of SAMCO Securities, StockNote and the Indian Trading League Company, believes that in the forthcoming week, all eyes would be glued on the most awaited SBI Cards IPO (Initial Public Offering) and RITES OFS (Offer for Sale) by the Government of India.
“No matter what the outcome is, markets would broadly be driven by the virus and global sentiment. While it would be impossible as well as futile to predict the pangs of the market, it will be wise to rely on the wisdom of Sir John Templeton during this bloodbath: ‘The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell,” Modi told a daily.
Interestingly, Vedic Astrology portal — KT Astrologer — had predicted in early February that a flash crash on global bourses is likely in the next few days based on Vedic astrology forecast.
“Flash crash that is Dow Jones going down more than 1,800 points in one day is very much possible and that can happen between Friday and Monday,” he had said.
On Friday, the Sensex crashed as much as 1,200 basis points with investors losing out Rs 5 lakh crore in just one hour after the market opened, while Japan’s Nikkei was down over 4 per cent, Hong Kong’s Hang Seng 2.8 per cent, Korea’s Kospi 3 per cent and Shanghai composite lost 3.8 per cent — the worst week since 2008.
$444bn wiped out of top 500 rich
In what is seen as a expensive loss for investors, the combined fortunes of the world’s 500 richest people fell by $444 billion as the coronavirus continued to spread, rattling equity markets worldwide.
The Dow Jones Industrial Average tumbled more than 12 per cent, the biggest five-day slide since the depths of the 2008 financial crisis, in a rout that vaporised more than $6 trillion from global stocks.
The crash more than erased the $78 billion in gains that the 500 wealthiest people had amassed since the start of the year through last week, as per the Bloomberg Billionaires Index.
The world’s three richest people — Amazon’s Jeff Bezos, Microsoft co-founder Bill Gates and LVMH chairman Bernard Arnault — incurred the biggest losses, with their combined wealth falling by $30 billion.