After Friday saw a sharp record-breaking recovery, Indian stock markets resumed their headlong plunge on Monday as the novel coronavirus outbreak continued to result in large scale disruptions to the world economy.
The benchmark BSE Sensex index closed the day down by a whopping 2,713.41 points (-7.96%) settling below the 32,000 point mark at 31,390.07. The broader Nifty fell sharply too, shedding 757.8 points to settle 7.61% down at 9,197.4 points. The day saw over 1,980 stocks record a decline, with only 430 shares advancing in value and 152 scrips remaining level with their Friday close.
By the time trading ended, Monday saw around Rs 7.5 lakh of investor wealth wiped out in the sell off, with the total market capitalisation of BSE firms falling to Rs 121.72 lakh crore from Rs 129.26 lakh crore.
According to traders, several factors weighed down investor sentiment during the day, all of which are related to the ongoing covid-19 outbreak.
First, the United States' Federal Reserve decided to cut its rates to shore up economic growth as demand dives. This reduction of rates to near-zero prompted sentiment to plummet, increasing the pace of the sell-off as investors saw the move to bolster economic growth as a sign of desperate times.
The rising number of covid-19 cases in India also served to add to the panic, as the figure hit 110 infected on Sunday, with the state of Maharashtra where India's financial capital of Mumbai is located seeing the highest number.
The steady outflow of foreign capital also contributed to the sell-off, with foreign institutional investors withdrawing over Rs 35,000 crore so far in March.
The last week had seen global markets, including both the Indian bourses, enter bear territory, but bargain hunters had led to a sharp recovery during the second half on Friday, even as early trade had seen both the Nifty and Sensex falling as much as 10 per cent, leading to an hour's suspension of trade for the first time in twelve years.
Analysts expect the high levels of volatility to continue going forward as the covid-19 pandemic may well result in a global recession during the current and following quarter.