The 30-scrip Bombay Stock Exchange sensex, recorded its biggest single-day fall, tumbling 1,942 points or 5.2% to 35,635 on Monday in tune with the worst day for global stockmarkets. Already anxious about the coronavirus impact and sliding oil prices, Dalal Street caved in under fears of financial instability in India due to the crisis at Yes Bank, the country's fourth largest private sector lender.
Reliance Industries closed an unprecedented 12% lower, resulting in it losing its crown as the most valued company in India to software services major TCS. All 30 sensex stocks closed the day in the red with ICICI Bank, TCS and HDFC Bank also among the top contributors to the index’s loss.
The day’s selling was led by foreign funds, which recorded a net outflow of almost £660 million while domestic funds cushioned the crash with net buying of nearly £500 million.
The sensex is nearing bear territory, which would be at 33,800 points. Countries like Japan, Singapore and Philippines have already entered the dreaded zone while Australia and Hong Kong are within touching distance of doing so. An index is said be in bear territory if it falls 20% from its peak. For the sensex, the all-time peak of 42,274 was recorded on January 20 this year. It’s been just a couple of months since then, but to battered investors, it seems like a long time ago.
Around the globe, in early trade the Dow Jones Index had hit its pre-fixed lower circuit filter of 7% and trading on Wall Street was stopped for 15 minutes. In the UK FTSE was down 6.6% in late trades while Germany’s Dax was down 6.7% and Brazil’s Ibovespa was down nearly 9%. Earlier in the day, in Japan, the Nikkei closed 5.1% lower while Hang Seng settled 4.2% lower.
According to Deepak Jasani, head, retail research, HDFC Securities, India is facing a deluge of negative triggers while the global markets are plunging after the break of the alliance between Opec and Russia, which combined to result in the worst one-day crash in crude prices (more than 30%) in nearly 30 years, fueling panic among investors across asset classes, with escalation of the coronavirus epidemic adding to the fears.
The sell-off on D Street was also aggravated by selling by foreign funds which pulled the rupee down to below the 74 mark to the dollar. On the other hand, gold prices continued to rise with the day’s high at close to Rs 44,000 per 10 grams in the city.
