Panic rules; Sensex sheds over 2,700 pts

The market's bounce back on Friday proved shortlived, as Sensex and Nifty50 fell close to 8 per cent on Monday under heightened fears of an impending

Covid-19-led economic slump and its impact on corporate earnings.

Tuesday seems to offer no respite as the overnight action by major central banks, including the US Federal Reserve which cut its lending rate to near zero and also announced quantitative easing programme worth $700 billion, failed to enthuse Asian and European markets, and in opening trade on Monday the US market had to be halted as benchmark indices hit the lower circuit. Stocks dropped 8 per cent in the first minutes of trading on Wall Street.

Economic, trade and travel shutdown are impacting equities across the globe, analysts said. China's factory output also plunged at the sharpest pace in 30 years.

In across-the-board selling, the Sensex fell 7.96 per cent, closing a massive

2,713.41 points down at

31,390.07, its second biggest fall in history. The Nifty-50 too fell 7.61 per cent and closed at 9,197.40, down by

757.80 points.

The market capitalisation of BSE-listed companies dropped by Rs

7,62,290.23 crore to Rs

1,21,63,952.59 crore at the close of trade. The market's volatility indicator, India VIX index, surged to the highest level in the last

10 years at 59.86, indicating continued swings in the market in the near furture.

Siddhartha Khemka, head-retail research, Motilal Oswal Financial Services, said, "Easing monetary policy action across the globe shows the impact coronavirus would have on the economy. These concerns will most likely weigh on the market, which would take a while to recover from this significant price damage. Volatility is likely to continue in the coming days and any bounce could be sold into. In such times of global volatility, retail investors should keep calm and not panic."

The foreign portfolio investors continue to run away from the Indian market, as they were net sellers of equities worth Rs 3,809.93 crore, as per the provisional data. The weakening of the Indian currency, partly responsible for FPIs selling, closed at Rs 74.27 per dollar, down by 35 paise from the previous close at Rs 73.92.

The selling in Indian market resumed as the market opened on the news of more coronavirus cases being reported from various parts of the country, with Maharashtra reporting almost one-fourth of the total cases.

As more and more economic activities are getting affected, the impact on the economy is likely to be significant, as RBI governor Shaktikanta Das said, "Coronavirus Pandemic can affect economic activity in India."