Sensex tracks global markets’ plunge

Constituents such as Reliance Industries and HDFC slide by more than 4% on black Friday

Indian stocks nosedived on Friday, that saw most equity benchmarks the world over lose heavy ground as concerns on the global impact of COVID-19 outbreak made investors turn cautious towards risky assets such as equities.

The benchmark Sensex lost a whopping 1,448.37 points, or 3.64%, to close at 38,297.29. This was the sixth straight session of losses for the index during which it lost a little over 3,000 points.

On Friday, Sensex constituents such as Reliance Industries and HDFC lost over 4% in a single day. Overall, more than 2,000 stocks lost ground on the BSE againstabout 400 gainers.

Meanwhile, the broader Nifty settled at 11,201.75, shedding 431.55 points, or 3.71%. Incidentally, the India VIX index surged almost 28% on Friday to end at 23.24 and was now not very far from its 52-week high of 30.18.

“Indian equity market plunged sharply today hitting the lowest level since mid-October on fears that COVID-19 outbreak may trigger a recession across major economies,” said Siddhartha Khemka, head, retail research, Motilal Oswal Financial Services, adding it was the worst weekly fall since 2009.

Elsewhere in Asia, the benchmarks of South Korea, China, Japan, Australia, Singapore and Thailand all lost more than 3% each. Dow Jones Industrial Average shed 870 points to 25,036 in early Friday trade.

“As COVID-19 spread rapidly around the world, hopes that it would be contained has vanished and markets fear it could turn into a pandemic.

Investors are fearful that it might lead to a global recession as the outbreak is spreading to the world’s largest economy — the U.S. as well as Europe which will adversely impact the global supply chains big time and derail economic growth,” added Mr. Khemka.

FPI sell equities

Back in India, foreign portfolio investors (FPIs) sold equities worth nearly ₹1,500 crore, bringing its net flows in the current month at about a paltry ₹1,800 crore. In January, FPIs were net buyers at ₹12,123 crore.

The fall would have been steeper if domestic institutional investors, that include insurance firms and mutual funds, did not step up their buying with net purchases of almost ₹7,700 crore.

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