The Nifty suffered its worst March since inception in 1994 as the deadly coronavirus pandemic triggered a turmoil in the global financial markets, hurting domestic equities already roiled by slowing growth and a rot in the banking system. The National Stock Exchange’s benchmark Nifty 50 index, which gauges the country’s top 50 companies by market capitalisation, dropped 23.25 per cent in March. The slump in Indian markets mirrored losses in global peers as the Covid-19 disease fuelled fears of recession, much worse than the 2008-09 financial crisis, in the world economy.
Prior to March 2020, the last time the Nifty witnessed its worst performance in the month was in 2001, the year in which well-known investor Ketan Parekh was arrested for fraudulently jacking up prices of stocks in the categories of information, communications and entertainment, then famously known as the “ICE” shares.
In the last month of financial year 2019-20, investors lost wealth to the tune of Rs 33.38 lakh crore. That reflected a massive outflow of foreign funds from Indian equities, as foreign institutional investors pulled out a net Rs 61,972.75 crore, exchange data showed.
Analysts say the coronavirus caused an unprecedented plunge in the Indian markets as investors the world over entered a state of panic.
“The current correction has been the fastest ever from highest point in three months. The cocktail of outbreak of coronavirus, trouble in the banking sector and slowing economic growth wrecked the havoc on investor sentiment,” AK Prabhakar, head of research at IDBI Capital, told NDTV over phone, as the country entered its seventh day of lockdown to curb the spread of the Covid-19 outbreak.
“It will take at least six to eight months for the dust to settle down for markets,” he said.
Selling pressure was visible across sectors in the domestic capital markets, as all 11 gauges compiled by the National Stock Exchange ended with a negative bias. The NSE’s indices of the banking, realty, media and financial services sectors were among the worst hit during the month. At the same time, the Nifty Bank, PSU Bank, Financial Services, Auto, Private Bank and Realty indices slumped between 30 per cent and 37 per cent each.
In the Nifty basket of 50 shares, only four shares managed to close higher. IndusInd Bank was the worst performer in the index, collapsing 68 per cent. Bajaj Finance, Bajaj Finserv, Zee Entertainment, Axis Bank, Tata Motors, Vedanta, Hindalco, JSW Steel and Mahindra & Mahindra plunged between 38 per cent and 50 per cent each.
“Going ahead retail, pharma and FMCG shares will be least affected from the outbreak of the virus and reports that US companies may shift their bases from China to India will be positive for Indian equities,” Mr Prabhakar said.
For the financial year ended March 2020, the Nifty and Sensex plunged 26 per cent and 23.73 per cent respectively.