March 11, 2020 / 4:50 AM / 22 days ago

Indian stocks crash into bear territory as virus now a pandemic

BENGALURU (Reuters) - The Indian stock market plunged into bear territory on Thursday, with the blue-chip Nifty 50 sliding to its lowest in over 2-1/2 years, after the coronavirus outbreak was termed a pandemic and the United States suspended travel from Europe.

A man walks past the Bombay Stock Exchange (BSE) building in Mumbai, India, March 6, 2020. REUTERS/Francis Mascarenhas

The NSE Nifty 50 index and S&P BSE Sensex fell over 7.5% each to 9,648.65 and 32,990.01, respectively. While the Nifty marked its biggest intraday drop since October 2012, the Sensex recorded its largest daily fall in over a decade.

Nifty intraday fall here

“The very fact that the WHO (World Health Organization) has called the outbreak a pandemic is a cause for worry for investors, especially since this comes against a backdrop of a slowing Indian economy,” said Gaurav Dua, head of capital market strategy at Sharekhan.

The Indian economy expanded at its slowest pace in more than six years in the last three months of 2019, with the recent collapse of a big bank adding to complications.

“India entered 2020 with a massive demand problem, and that has been worsened now. This is a wash-out year for markets,” said Yogesh Nagaonkar, chief executive of Rowan Capital Advisors in Mumbai.

The rupee weakened as much as 0.8% to 74.35 against the dollar, its weakest level since October 2018, while the benchmark 10-year bond yield ticked up to 6.19%.

GLOBAL PANIC

Markets around the world were stunned after U.S. President Donald Trump suspended all travel to the United States from Europe, except from the United Kingdom, for 30 days starting Friday.

U.S. S&P 500 futures plunged as much as 4.9%, while Euro Stoxx 50 futures tumbled 8.3% to mid-2016 lows. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 3.2%.

India too said it would suspend a vast majority of visas to the country to contain the virus.

All stocks on the blue-chip indexes in Mumbai were trading in the red, dragged down mostly by large-cap energy and financial shares.

Top private-sector lender HDFC Bank Ltd caused the biggest damage to the indexes, sliding 9.5% to its lowest since Nov. 2018.

Oil-to-retail conglomerate Reliance Industries Ltd fell as much as 9.1% to a more than 16-month low.

Fund managers and market analysts said the bulk of selling came from foreign institutional investors.

“There has been some pullout of the easy money and liquidity that was driving markets higher so far,” said Mahesh Patil, co-chief investment officer at Aditya Birla Sun Life AMC in Mumbai, whose team manages some $12 billion in equities.

“We don’t know where the bottom is.”

India is set to release retail inflation data for February later in the day that is expected to fall to a three-month low due to moderating food prices.

Reporting by Chris Thomas and Sachin Ravikumar in Bengaluru; editing by Uttaresh.V and Anil D'Silva

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