For representational purposes. (Photo | PTI)
For representational purposes. (Photo | PTI)

Markets make record-breaking recovery after suffering worst crash ever

Automobile and FMCG stocks, however, remained stressed as mounting restrictions on travel and public gatherings are seen impacting demand FMCG significantly.

NEW DELHI: Indian stock markets staged a sharp, record-breaking recovery on Friday after an initial crash saw trade suspended for the first time in twelve years.

The BSE Sensex regained the 34,000 point mark to close 4.04 per cent higher at 34,103.5, while the NSE Nifty closed just shy of the 10,000 mark at 9,955.20 (up 3.81%) after bargain seekers flooded the market in search of blue-chip stocks at throw-away prices and market regulator Sebi said it would “take any action” required to contain the carnage. 

"This week will go down in history as one of the worst weeks for global markets. Consider this, the US market had declined 18% in just the first four days of trading. Sensex closed 9% lower for the week but not before being locked at the lower circuit on Friday," said Sanjeev Zarbade, VP PCG Research, Kotak Securities.

"Markets have been battered by the potential economic impact on account of various preventive travel measures by major countries.  ONGC, IndusInd Bank and State Bank of India were among the major losers in the BSE-30 Index. FPIs sold equities worth US$2.3 bn over the past five trading sessions while DIIs bought US$1.8 bn worth of equities in the same period," he added.

Market volume data shows that the resurgence was fueled by banking stocks for the large part, with four out of the five most traded Sensex stocks being financiers: HDFC Bank, State Bank of India, ICICI Bank and HDFC. 

In a day of broken records, the Sensex and Nifty first plunged 10 per cent the minute trading started, triggering the first lower circuit breaker and resulting in an hour-long suspension of trading. The fall was the steepest recorded ever, with the Nifty plunging nearly 966 points to crash below the 9,000 mark and the Sensex shedding over 3,000 points to breach the 30,000 level. 

But, the indices changed direction the minute trade resumed. By 1.30 pm, the Sensex had zoomed an unprecedented 5,530 points and the Nifty 1,540 points from the day’s low -- the largest single-day recovery in history. 

In terms of value, the recovery spanned the spectrum, the top ten Sensex gainers were SBI (+13.87%), Tata Steel (+13.48%), HDFC (+10.33%), Sun Pharma (+8.34%), Bajaj Finance (+6.31%), Bharti Airtel (+5.54%), ICICI Bank (+5.28%), ONGC (+5.27), HDFC Bank (+4.84%) and NTPC (4.71%). 

Automobile and FMCG stocks, however, remained stressed as mounting restrictions on travel and public gatherings are seen impacting demand FMCG significantly.

The decline in auto stocks was spurred by February sales contracting by a whopping 18 per cent and a warning from the Society of Indian Automobile Manufacturers (SIAM) that the Covid-19 outbreak would significantly impact both sales and production. The five worst losers on the BSE Sensex index were Nestle India (-4.12%), Asian Paints (-2.35%), Hindustan Unilever (-1.27%), Hero Motocorp (-0.83%) and HCL Tech (-0.05%). 

According to market analysts, aside from the assurance by Sebi and the Reserve Bank of India that they were on top of the situation and would take any action required to stabilise the situation, other factors like the steady fall in crude oil rates and the RBI’s liquidity boost also helped in the recovery. 

While Friday’s recovery is a record-breaking one, India’s markets have had the worst week in over a decade, the Sensex losing an 11.35 per cent and the Nifty 11.6 per cent of their value. 

"Downside risk for the Indian markets cannot be ruled out in the near term given uncertainty across globe. The improvement in domestic macro data (IIP and easing CPI) is a good sign, however growth recovery still remains evasive and therefore there are high expectations that RBI may cut rates in its next policy meet to offset the impact of coronavirus as well as economic slowdown. Meanwhile in the near term, we expect volatility to remain high and maintain cautious stance," said Ajit Mishra, VP & Sr.Technical Analyst at Religare Broking.

Related Stories

No stories found.
The New Indian Express
www.newindianexpress.com