Equity investors facing heat of COVID-19 spread

Indian equity investors are facing the heat of the global equity meltdown amid fears of deadly coronavirus becoming a global pandemic.

The equity investors in Indian markets, at an average, have lost Rs 1.26 lakh crore every day in the past five trading sessions.

As coronavirus fears weigh heavy on the global economy, equity investors witnessed Rs 6.31 lakh crore of their wealth being eroded in just six trading sessions. Equity investors’ wealth is measured by the market capitalisation of all the listed firms in India.

The Benchmark indices, which were outperforming most of the stocks in the past couple of years, have also started to witness a bear amid the meltdown -- with both BSE Sensex and NSE Nifty witnessing losses for the fifth day in a row.

In the past six trading sessions, the BSE Sensex has tumbled 1,577 points and closed at a sub-40,000 level of 39,745.66. The markets have tanked briefly to sub-40,000 mark in the aftermath of the Budget 2020.

On the other hand, a broader index, the NSE 50-share Nifty has crashed by 493 points in the past five days.

Indian markets haven’t been alone in this sell-off -- both far-eastern, as well as the western markets, have witnessed a huge level of selling by the investors, who have been betting more on the gold. Usually, considered as a safe asset, the prices of the yellow metal surge in times of economic uncertainty.

In the last month after the outbreak, gold prices in the international market have surged by almost 5% -- testing peak levels as well.

The world economy is anticipating a severe hit from Coronavirus, as Hubei -- one of China’s most economically important provinces -- faces lockdown.

It is estimated that 22 million businesses or close to 90% of all active businesses in China are located in the most impacted regions. Additionally, as China’s share in global GDP increased four-times and rose from 4% in 2002 to 16% in 2018, the outbreak might cause a drag of approximately one percentage point on global GDP growth.