Sensex crashes over 1,400 points, rupee closes at six-month low amid fears of coronavirus spread
The BSE Sensex recorded its biggest single-day decline since August 2015.
The Indian stock indices recorded their worst performance in years on Friday as global markets slumped on fears that the coronavirus outbreak will lead to a recession. The slump in the market came ahead of the release of the Gross Domestic Product data for the October-December period.
The BSE Sensex crashed 1,000 points even when trade opened, and never recovered. The index closed 1,448.37 points lower, at 38,297.29. This was the biggest one-day decline since August 2015 for the Sensex, according to Mint. The Nifty 50, meanwhile, shed 431.55 points to close the day at 11,201.75 – its worst weekly fall since 2009.
ITC’s was the only stock that did not decline on the Sensex – it was nearly flat with a 0.05% rise. On the Nifty 50, Indian Oil Corporation, with a 0.57% rise, and Maruti Suzuki, with a 0.07% rise, were the only two stocks that advanced.
Shares of auto companies traded lower amid fears that COVID-19 would hit global supply chains. China, which is the epicentre of the outbreak, is a major manufacturing hub for auto components. More than 300 BSE stocks, including IndusInd Bank, ITC, Hero MotoCorp, Wipro, ONGC and L&T, hit a 52-week low on Friday morning, according to Moneycontrol. All Asian shares also suffered major losses.
The Indian rupee closed at a nearly six-month low of 72.24 per dollar, against the previous day’s close of 71.55.
Although China has been steadily reporting fewer deaths over the last three days, the novel coronavirus is spreading fast in other countries. South Korea on Thursday reported its 13th death from the epidemic. Iran said 26 people have died so far from the virus. The World Health Organization said on Wednesday that there are now more cases of the coronavirus reported outside China on a daily basis than within the country.
The United States has warned of an “inevitable coronavirus epidemic”. The US Centers for Disease Control and Prevention asked Americans to be alert, as the global situation points to a possible pandemic. “It’s not a question of if. It’s a question of when and how many people will be infected,” the Centers for Disease Control Principal Deputy Director Anne Schuchat, said on Tuesday. The US has so far reported 57 cases of the disease.
“Until last week, the market was of the view that coronavirus is going to have only a minimum impact on global economy,” Vinod Nair, head of research at Geojit Financial Services, told NDTV. “An increase in the number of new cases is changing the view. There are fears of some slowdown in the economy.”
Former Reserve Bank of India Governor Raghuram Rajan said the best way to deal with the coronavirus shock was to contain its spread. “People want to have a sense that there is a limit to the spread of this virus perhaps because of containment measures or because there is hope that some kind of viral solution can be found,” Rajan told Bloomberg.
Rajan said the outbreak will force companies to rethink supply chains and overseas production facilities. “Globalisation in production is going to be hit quite badly,” he added.