The Coronavirus crisis has had a huge impact on the markets globally with the Sensex dropping by 2,500 points on Thursday, recording one of the worst openings. This comes a day after the World Health Organisation (WHO) declared the virus as a 'pandemic' after which US President Donald Trump suspended all travel from Europe, excluding the UK, to the US for the next 30 days to stop the spread of the virus. COVID-19 has claimed over 4,200 lives and infected more than 117,330 people across 107 countries and territories.
Ashish Wakankar, founder of Equipoise Capital spoke to Republic TV giving his perspective on why the stock markets were nosediving. "What you are witnessing today in the markets is nothing but a reaction to global markets. Yesterday the Dow Jones was down by 6% following the announcement where travel from Europe was banned by US government," he said.
"Indian markets are closely integrated with the global markets, following a significant amount of foreign investors having a main stake in the Indian markets. In today's time with the advent of social media, I see an advent of pressure on global leaders to respond to Coronavirus. Markets seem to be overreacting to the news flow," he added.
The crashing markets seem to suggest that domestic equity investors don't seem convinced by the global steps being taken to combat the virus. Reacting to this, Ashish said, "Markets are clearly over-reacting globally and Indian markets are following suit. There will be weaker companies who would bear brunt but large players clearly stand to benefit out of it. What we are witnessing is a steep fall but there might be a V-shaped recovery after the panic is over."
(Image credits: PTI)