Domestic stock markets suffered sharp losses in early trade on Monday tracking global peers which fell even after the US central bank delivered another unscheduled rate cut. The S&P BSE Sensex index plunged more than 1,950 points in the first few minutes of trade, and the broader NSE Nifty 50 benchmark dropped below the 9,400 mark, amid volatile trade. Analysts say domestic fundamentals have taken a back seat as the coronavirus pandemic continues to spook the global markets.
Despite the gain of around 4 per cent each in S&P BSE Sensex and NSE Nifty 50 on Friday, in a dramatic recovery following an intra-day plunge of more than 10 per cent that triggered a trading halt for the first time since 2009, the benchmark indices suffered their worst week since the same year.
Equity markets in other parts of the world were hammered on Monday after emergency rate cuts in the United States and New Zealand, and a raft of steps by policymakers worldwide failed to stem the rout in markets spooked by the broadening fallout of the coronavirus.
MSCI’s index of Asia-Pacific shares outside Japan fell 0.5 per cent, to a level not seen since early 2017, while Japan’s Nikkei was up 0.1 per cent following an over 6 per cent decline on Friday to the lowest since late 2016 and South Korea’s KOSPI was a shade weaker.
US stock futures plunged 4.8 per cent to hit their down limit before daybreak in Singapore. Australia’s benchmark stock index fell 7 per cent in the first quarter-hour of trade before paring some of the losses.
Overnight in the US, the Federal Reserve cut the key interest rate by 100 basis points to a target range of 0 per cent to 0.25 per cent, saying that it would expand its balance sheet by at least $700 billion in coming weeks.
Meanwhile, coronavirus continues its menacing march across countries and continents. The latest count suggest that around 1.5 lakh people have contracted the virus and 5,000 people have already succumbed to the disease. This is fast turning into the most fatal pandemic in the past century, after the Spanish flu in 1918.
The domestic markets seem set to continue their rough ride this week, in line with their global peers, as lockdowns are becoming a way of life in many parts of the world; governments worldwide are scrambling to save lives and flatten the curve to fight the dreaded pandemic. The impact is already being felt across industries, ranging from travel and tourism to manufacturing, thereby triggering fears of a recession. The markets will also keep an eye on RBI for measures to cushion the pain on the economy.
On the corporate front, Yes Bank will be in focus after reporting a staggering Rs 18,654-crore loss for the December quarter due to higher recognition of dud assets on the books, and an erosion of capital buffers to the brink. The gross non-performing assets shot up to Rs 40,709 crore or 18.87 per cent of assets as of December 31, 2019, up from the Rs 17,134 crore or 7.39 per cent in the preceding September quarter. Meanwhile, in a welcome relief for the customers, the withdrawal limit will be lifted on Wednesday evening after the government notified the restructuring scheme proposed by Reserve Bank of India. The central bank had placed Yes Bank under a moratorium earlier this month.
On the initial public offering (IPO) front, SBI Cards is scheduled to debut on the bourses this morning. The IPO was open for subscription from March 2-5 at a price band of Rs 750-755 per share. State Bank of India holds 76 per cent stake in SBI Cards, while the rest is held by Carlyle Group.