Sensex stages sharp recovery after first trade halt in 11 years
CHEER AFTER PANIC
MUMBAI: Indian stocks recovered on Friday after a 10% decline in benchmark indices triggered the first trading suspension in 11 years, as investors returned to buy equities on hope of government and RBI action to stanch the market carnage caused by the new coronavirus pandemic.
The Sensex rose 1,325 points, or 4.04%, at the close of trading to 34,103.48, after slipping below the 30,000-point level to 29,388.97 earlier in the day. The Nifty was up 365.05 points, or 3.81%, to 9,955.20.
The Sensex had fallen as much as 10.3% in 15 minutes at the start of trading, triggering a circuitbreaker that caused a 45-minute suspension, the first since May 2009, before starting to recover to stage its sharpest one-day recovery. Traders cited multiple reasons for the bounce, from simple bargain hunting to short covering, hopes for more stimulus and a potential vaccine being developed by a Canadian firm.
MUMBAI: Indian stocks recovered on Friday after a 10% decline in benchmark indices triggered the first trading suspension in 11 years, as fraught investors from Mumbai to Manila returned to buy equities on hope of government and central bank action to stanch the market carnage caused by the new coronavirus pandemic.
At the end of a nerve-wracking week for equity investors worldwide, the Bombay Stock Exchange’s benchmark 30-stock barometer, the Sensex, rose 1,325 points, or 4.04%, at the close of trading to 34,103.48, after slipping below the psychological 30,000point level to 29,388.97 earlier in the day. The National Stock Exchange’s 50-stock Nifty was up 365.05 points, or 3.81%, to 9,955.20.
The Sensex had fallen as much as 10.3% in just 15 minutes at the start of trading, erasing ₹13 lakh crore of investor wealth and triggering a market-wide circuitbreaker that caused a 45-minute suspension, the first since May 2009, before starting to recover lost ground to stage its sharpest one-day recovery. The wild swings marked the widest trading range on India’s most closely followed stock market bellwether in recent years.
“There’s a global re-pricing of risk and India’s getting swept up in that wave,” said Rainer Michael Preiss, equity chief investment officer at the Global CIO Office in Singapore.
As Friday ended, brokers in Mumbai were still trying to calm the frayed nerves of their clients, who much like their peers across the globe, have endured a gutwrenching week for equities.
“We’re getting calls asking what is to be done now, should we hold or add more capital, and our advice to them is there will be opportunities once the sentiment stabilises,” said Ketan Karkhanis, senior vice president and head of equity relationship services at ICICI Securities Limited in Mumbai. “Nobody anticipated such a sharp and swift decline.”
Investors experienced a rollercoaster day on other Asia-pacific markets as well. Australian stocks staged a record intraday swing to close up 4.4%. Thailand pared a plunge of 13% to gain 0.3%, and the MSCI Asia Pacific Index gauge trimmed its loss to 1.9% after sinking as much as 6.7%.
Traders cited multiple reasons for the sudden bounce, from simple bargain hunting to short covering, hopes for more stimulus and a potential vaccine being developed by a Canadian company to cure the coronavirus.
“People are probably thinking there will be some kind of policy measures to support markets,” on top of ones already announced, said Tomoichiro Kubota, a senior market analyst at Matsui Securities. “We could see a huge rebound in the short term given how much the market has fallen. But it doesn’t feel like the mid-term downward trend will change. The market will continue to trade in high volatility.”
The Sensex lost 2,919 points, the biggest one-day decline in absolute terms, or 8.18%, on Thursday to a two-year low, a day after the World Health Organisa