Sensex, Nifty tank again, rupee breaches 75-mark
Coronavirus pandemic fears keep volatility in stock markets high
nMUMBAI: Indian stocks, bonds and currency were walloped in yet another volatile day for the markets, as investors continued to digest the impact of the growing novel coronavirus threat. The rupee closed at a record low of ₹74.99 to a dollar, stocks fell 2%, and government bonds slipped.
The BSE Sensex ended at 28,288.23, down 581.28 points or 2.01%, while the Nifty was at 8,263.45, down 205.35 points or 2.42%. The rupee, which slipped below the 75-mark for the first time, was down 1.01% from its previous close of ₹74.32. The home currency opened at ₹74.96 and touched an all-time low of ₹75.31 a dollar.
The 10-year government bond yield closed at 6.415%, a level last seen on February 13, up 11 basis points (bps) from its previous close of 6.296%, as central banks across the globe began slashing interest rates to keep markets liquid and solvent.
The rupee, which was one of the weakest Asian currencies on Thursday, has depreciated 3.8% against the dollar in March, and down 4.87% in 2020 so far. Other weak Asian currencies in this month so far are Indonesian rupiah (down 10.02%), South Korean won (down 5.54%), Malaysian ringgit (down 4.5%) and Singapore dollar (down 4.27%). The exodus from risky assets and the flight to safe-haven assets have found the dollar appreciating.
Pandemic fears have kept volatility in stock markets high. The National Stock Exchange’s (NSE’S) India volatility index or VIX, which tracks investors’ perceptions of volatility for at least a month ahead, closed at 71.95 on Thursday, the highest since November 26, 2008, gaining 12.50%. The volatility index typically has an inverse correlation with the markets.
The relatively stronger dollar will continue to weigh on the rupee, said Madan Sabnavis, senior economist at CARE Ratings. Volatility in rupee-dollar movement has been a concern, even though this has been the case with currencies across the globe too given the weak sentiment in the midst of the pandemic, he said. The rupee’s sharp fall is the result of huge foreign investment outflows on the back of falling indices, an analyst said. FIIS have sold $5.12 billion in debt and $4.94 billion in equities in March. Continued FII outflows may keep the currency under pressure.
However, a rupee crash may be averted, with the Reserve Bank of India assuring that steps will be taken to maintain sufficient liquidity. USD/INR spot expected trading range is at 73.7-76, said Praveen Singh, Fundamental Research, Sharekhan by BNP Paribas.
According to Deepak Jasani, head of retail research, HDFC Securities, Indian stock markets see-sawed based on the price swings in the Dow Futures, even as the Asian markets closed deep in the red and European markets gave up some early gains after the European Central Bank surprised markets by unveiling a major asset-purchase programme to combat the financial difficulties caused by the coronavirus outbreak.
Markets in other Asian regions were weak with equities in Japan, China, Hong Kong, Australia and Korea down 1-8%.
In India, Maruti Suzuki India Ltd and Bajaj Finance Ltd lost maximum ground among the 30 S&P BSE Sensex stocks, falling 9.85% and 10.24%, respectively.