Volatile session takes Nifty below 9000-mark Travel industry could lose 50% of annual business

■ Negative global cues, virus fear lead to last hour sell-off

A late selloff led to a 2.5per cent fall in Sensex and Nifty-50, triggered by a sharp fall in the European markets and indications that US market would also open weak after US benchmark Dow Jones suffered its worst overnight fall by 12.9 per cent over the rapid spread of coronavirus cases outside China.

The number of confirmed coronavirus cases worldwide stood at 186,900, with 7,477 deaths. US cases jumped to 4,743, with 93 deaths, while in Europe, Italy was the worst hit with close to 2,000 people dead.

In India, confirmed cases stood at 137 with three deaths reported so far, the latest being a death reported from Mumbai.

Not only is the number of new Covid-19 cases and deaths rising but the daily percentage gains are accelerating, said a report.

After a volatile session, which saw benchmark indices often trading in the green, there was a sharp selloff in the last half an hour of trade, which led the Sensex to drop 810.98 points to close at 30,579.09 points, registering a 2.58 per cent decline. The broader Nifty-50 Index closed below the 9,000 level at 8,967, down by 230.35 points, or 2.5 per cent. The Nifty-50 hit a high of 9,403.80 intraday and a low of 8,915.60 as volatility index India VIX jumped 7 per cent to 63 levels, its highest in over a decade.

Both the key indices hit fresh three-year lows on Tuesday as Covid-19 showed no signs of abatement and investors tried to save their investments by booking profit wherever they could.

Financials were the worst affected, with the Nifty Bank Index down by 4.10 per cent, led by heavy selling in private banks. IndusInd Bank lost 9.20 per cent, followed by ICICI Bank (-8.92 per cent), Kotak Mahindra Bank (4.64 per cent), Axis Bank (4.51 per cent) and HDFC Bank (-2.33 per cent). State-run State Bank of India shed 4.23 per cent.

Among the smaller banks, Federal Bank declined 7.99 per cent and City Union Bank fell by 3.02 per cent.

Investors saw wealth erosion by Rs 2.11 lakh crore, as the BSE's market capitalisation fell to Rs 1,19,52,066.11 crore as against Rs 1,21,63,952.59 crore on Monday.

Losses in the broader market were lower. The BSE Mid-cap Index was down 1.84 per cent while the BSE Small-cap Index was down 2.27 per cent.

The foreign portfolio investors (FPIs) were net sellers of equities worth Rs 4,044.69 crore, the second highest one-day selling in March. Domestic institutions were net buyers by Rs 3,422.12 crore.

"Month to date, FPIs have pulled out Rs 51,000 crore from the domestic market, led by weak global cues on the worries of a slowdown across the globe. Coronavirus fear is intensifying worldwide and fresh travel bans seem to hurt the global economic sentiment," said forex consultant IFA Global.

"Global markets are in meltdown as the pandemic spreads, with roughly $14 trillion in shareholder value erased and even safe assets such as gold have been sold to cover losses," IFA Global said.

The summer season could be a washout for the travel and hospitality sectors. Considering both inbound and outbound travel is affected, India could lose up to 50 per cent of the annual business, which is much higher than the losses during the global financial crisis, estimates the industry.

Several countries are closing their borders to keep further spread of Covid-19 away. India too has suspended tourist visas till April 15, restricted entry of passengers from the UK, Europe as well as Afghanistan, the Philippines and Malaysia. These restrictions have brought the tourism industry, which was already limping due to the infection, to a standstill.

The summer season, which starts from February and goes on till June, accounts for 60 to 70 per cent of the outbound travel and over 20 per cent of the inbound travel. Altogether the season accounts for about 50 per cent of inbound and outbound travel and the season might almost get washed out, said Kapil Goswamy, MD, Big Breaks.com.

"Even during the Mumbai terror attacks or global financial crisis, the impact was not this large. We would probably lose 50 per cent of our annual revenues this time,' he said.

"Bookings have been cancelled till April-May, which are our peak season. Nonresident Indians used to come over during this period and they also have to put their travel plans on hold. It is 'zero tourism' now," said Iqbal Mulla, chief council, Global Tourism Council.

According to Goswamy, the industry has come to a standstill. "South Asia has been closed since February. Travel to shorthaul destinations like Thailand, Singapore and Malaysia has not been happening from February. Usually, by March we start seeing groups and families booking for long-haul destinations like Europe and the US. This booking has either not happened or whatever had happened has been cancelled," he said. Even the business travel has got affected as most of the companies are cancelling their meetings and conferences.

Domestic travel by rail and air is also not spared. Trains bookings to Delhi, Kolkata, Bangalore, Hyderabad and Chennai are down 25 per cent compared to the previous month.

"Since the past week we have seen a rise in the number of train ticket cancellations due to the sudden outbreak of coronavirus.New bookings have also gone down by more than 20 per cent. In fact, we have recently launched a free cancellation policy, which allows users to get a free cancellation on their train bookings," said Dinesh Kotha, co-founder, Confirmtkt.

Hotels too are bearing the brunt of the contagion. "Cancellations are happening and bookings by tourists have come to a standstill. Companies also are advising their executives to avoid travel. Summer season usually sees a lot of domestic traffic, especially to hilly destinations. This time, it is unlikely for things to improve before June end,' said T. Natarajan, CEO, GRT Hotels and Resorts.