March 4, 2020 / 8:51 AM / 3 months ago

Indian shares drop sharply as virus cases jump to 28

* Nifty 50, Sensex down nearly 2% each

* 16 Italian nationals test positive in India, tally at 28

* HDFC Bank top drag, down over 4% (Updates shares, virus cases, adds analyst comment)

By Chris Thomas

March 4 (Reuters) - Indian shares slid nearly 2% in afternoon trading on Wednesday after the country’s health minister confirmed that the number of coronavirus cases had risen sharply to 28, fuelling worries that economic activity may be affected further.

The NSE Nifty 50 index fell as much as 1.96% to 11,082.15, while the benchmark S&P BSE Sensex dropped 2% to 37,846.1.

Stock markets in Asia and Europe too struggled as an emergency rate cut on Tuesday from the U.S. Federal Reserve seemed to stoke rather than soothe fears over the virus’ widening global economic fallout.

India said on Wednesday 16 Italian nationals in the country had tested positive for the virus.

“The biggest challenge that we are likely to witness in this situation is that overall economic activity will clamp down significantly - it’s a contagion effect we are looking at,” said Naveen Kulkarni, chief investment officer at Axis Securities.

The world’s second-most populous country after China is a particular concern due to the available countermeasures and population density, United States intelligence sources told Reuters last week.

More than 93,000 cases have been reported worldwide, and several thousand have died from the flu-like coronavirus, which emerged in the central Chinese city of Wuhan late last year and has since spread to more than 80 countries.

Indian equities, which had rallied on Tuesday on hopes of a coordinated effort by major central banks to combat the economic fallout of the virus, were pressured on Wednesday by heavyweight financial stocks.

Top private-sector lender HDFC Bank Ltd was the biggest drag on the indexes, falling as much as 4.1% to its lowest since mid-September and pulling the Nifty Private Bank Index 3.5% lower.

Conglomerate Reliance Industries Ltd was down 2.6%.

The Nifty Pharma, up 0.8% by 0846 GMT, was the only sector index trading in the green. (Reporting by Chris Thomas in Bengaluru; Editing by Maju Samuel)

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