Bloodbath in Indian equities continues; Sensex down 1,800 pts

Indian equities on Monday continued their bloodbath this week as well as they crashed by about 5%, after heavy buying by the domestic institutional investors on Friday.

The Benchmark indices in India collapsed by close to 5 per cent at the beginning of the trade. The 30-share index of BSE – Sensex – plunge1,841 points (5.4%) at 32,262 – shredding all of the gains made on Friday.

All the stocks on Sensex, led by IndusInd Bank (7.84%), traded in deep red. The banking stocks in the markets were worst-hit over concerns on the stability of the Indian financial system.

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The overall market breadth was also largely negative – with just 205 advances against 1,072 declines. About Rs 5 lakh crore of investor wealth was wiped off in the minutes of trade.

On the other hand, broader index – 50-share NSE Nifty – crashed below the psychological 10,000-mark. The Nifty was trading at 9,426, down 529 points (5.4%).

“We believe that market volatility will continue for some time until the peak of global virus. In the meantime, companies worldwide are scrambling to realign demand and supply chains - with some like airlines in the EU facing a more existential threat. Corporate debt remains a key area to watch,” said Anubhav Srivastava of Infinity alternatives.

Other far eastern markets are also witnessing a bloodbath as Australian indices collapsed about 8 per cent after the Federal Reserve announcement spooked the investors.

The Fed has announced that it will cut the interest rate to near zero. As a reaction, stock-index futures opened sharply lower Sunday night, quickly extending losses to fall beyond the daily 5 per cent limit.

As the foreign funds pulled out of Indian markets, rupee tanked 40 paise to 74.14 – precariously close to its all-time low of 74.45.

With just 15 days of this month over, foreign fund pull out in the Indian equity markets has reached unprecedented levels. FII has withdrawn Rs 30,334.30 crore from the Indian markets -- a level that was not even seen at the peak of the 2008 recession. In January 2008, FIIs had withdrawn Rs 29,447.51 crore.