Equity benchmark indices plunged on Monday due to heavy selling pressure on the back of increasing concerns that global economic growth could be impacted by the rising number of coronavirus cases outside China. Also, F&O expiry could induce some volatility during the week.
All sectors ended in the red, however, metal, pharma, banking and realty were the worst hit in today’s session.
The Sensex ended 807 points lower or 1.96% at 40,363 and the Nifty tanked 252 points or 2% at 11,829, clocked its worst fall since the Budget day.
Here are the top factors that led the market to fall in today’s trade:
Global markets: The global markets took a hit amid media reports citing that South Korea put the country on high alert after the number of infections hit more than 700 and deaths rose to seven, and in Italy, the number of cases jumped to above 150 from just three last week. Asian markets ended with losses while European indices traded with losses between 3.20-3.85%. Nasdaq and Dow futures were also down over 1.5%.
Rupee: The Indian rupee extended its decline amid heavy selling in domestic equities and strengthening of the American currency in the overseas market. The currency fell by 21 paise at 71.87/$.
Fall in metal & pharma stocks: In today’s trade, the metal and pharmaceutical stocks have been the most affected due to their direct dependence on China for raw material imports. The metal stocks were leading the decline on the NSE, with JSW steel, Hindalco, Tata Steel and Vedanta shedding between 6-9% each on the NSE.
Macro data in focus: Investors will be looking forward to the Gross Domestic data for the third quarter of FY20 to be out later in the week.
Gold price: International gold prices reached a fresh seven-year high and silver also scaled a new high. Gold prices surged over 2% to their highest in over seven years in the international market at $1,678.58. Dollar strengthened on a safe investment bet compared to other currencies as dollar sets unaffected by the coronavirus.
Meanwhile, media reports mentioned that the International Monetary Fund (IMF) has warned that the coronavirus epidemic could put an already fragile global economy recovery at risk. Global growth was poised for a modest rebound to 3.3% this year, up from 2.9% last year.
On the flip side, any positive outcome from the US president’s India visit in terms of strategic partnership/trade deal could cheer the Indian markets.
