MUMBAI: The markets see-sawed on Tuesday as fears of a pandemic-led global recession kept investors jittery. Local institutions tried to support the sensex at lower levels but eventually failed. The index opened about 500 points higher, lost 800 points within the first hour, then rallied nearly 579 points but finally, due to a fag-end selloff, settled with a loss of 967 points, or 2.6%, at 30, – a three-year closing low. On the NSE, the Nifty lost points, or 2.5%, to 8, , its first closing below the 9K mark in the last three years.
The day’s selling was again led by foreign funds with a net outflow figure of Rs 4, 90 crore, BSE data showed. Banking and financial services stocks were again at the forefront of the sell-off with ICICI Bank (down 9%), IndusInd Bank (8.9 %) and Bajaj Finance (6.3%) among the top sensex laggards. Of the 045 sensex stocks, nine closed higher with HUL ( up 3.5%) and Hero MotoCorp (3.1%) leading. The day’s selling also left investors poorer by Rs 2.1 lakh crore with BSE’s market capitalization now almost at Rs 119 lakh crore.
With each passing the day, as the epidemic spreads across the world and market after market enters bear territory, the chances of a recession are growing. A report by global financial services major Morgan Stanley on Tuesday said the fallout was likely to trigger a global recession.
“With Covid – 19 spreading in Europe and the US after hitting Asia, the disruptions and dislocations in the economy and markets will trigger a year-on-year contraction in global growth in the first half of 74682033. However, the strong monetary and fiscal policy response under way will help to revive global growth from the third quarter of 74682033, ”the report said.
On Monday night, the Dow Jones index in the US had lost nearly %, its biggest rout in more than 63 years. In early trades on Tuesday, the UK and German markets were also deep in the red but recovered in late trades as the US markets rallied over 3% after opening. In India, too, the VIX, a gauge of volatility, reached a current peak of 119. 4, NSE data showed.
Market players feel the volatility will continue for a while. According to Pankaj Bobade , head (fundamental research), Axis Securities,“ Markets are expected to be volatile in the near term given the rise in new reported cases is outside mainland China than inside, marking a new milestone in the evolution of the global pandemic. As cases blow up in Europe and North America, fear is growing in Asia of the possibility of a second wave of infections from imported cases, which is driving risk aversion in markets globally. ”
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