On the first day of the Financial year 2020-21, with the sharp rise in India's Coronavirus (COVID-19) cases amid the 21-day nationwide lockdown to 1637 positive cases, the Indian stock markets plummeted on Wednesday. According to PTI, Sensex plunged by 1,203.18 points to end at 28,265.31 while Nifty tanked 343.95 points to close at 8,253.80. About 937 shares have advanced, 1075 shares declined, and 131 shares are unchanged, as per market reports.
Experts state that Nifty is down 30% from its recent record high of 12,430 hit on January 20, as almost 45 of the Nifty 50 companies have hit their multi-year low amid the global pandemic COVID-19. Moreover, reports state that 90% of the companies hit their 52-week low in March as India saw the rise in cases and record drop in demand. Foreign institutional investors (FIIs) have also pulled out more than Rs 60,000 cr investment from the Indian equity market in March alone and the MSCI has deferred its decision on increasing foreign inclusion factor (FIF) for the Indian markets, as per reports - affecting the markets negatively.
This development comes after the Reserve Bank of India (RBI) announced further measures for dealing with the COVID-19 pandemic which included the extension of realisation period of export proceeds, review of limits of Way and Means advances of States/UTs and implementation of countercyclical capital buffer. The RBI has assured that the Central Bank can provide enough liquidity in the market amidst the COVID-19 crisis and has also announced a moratorium on all installments for a period of 3 months. India's current COVID-19 tally stands at 1637, with 38 deaths.
The fear of the virus has disrupted business supply chains, while the number of positive cases has hit 872, 972 across the world. Moody’s have estimated that coronavirus has increased the risk of a global recession as advanced countries United States, Japan, Germany, Italy, France, Britain, and Korea battle the virus, but the UN has claimed that India and China may be spared. Analysts have said that as China is the largest supplier of raw materials and manufacturing hub for different industries - core industries like automobiles, metal and pharmaceuticals' trade have been brought to a standstill due to China closing off its borders. Currently, US which is the epicenter of the pandemic has extended its social distancing restrictions till April 30.
Other factors that have affected markets in India are the fall in crude oil prices as even domestic crude prices have fallen down to an 18-year low, with major Oil managing companies' shares hitting to a 52-week low. Oil prices have reportedly slumped by 60% - the lowest since 1991 after Saudi Arabia slashed its prices in an alleged price war with Russia. Both countries are now reportedly set to increase production dramatically this month, after an agreement between OPEC and its allies to lower output expired at the end of March.