Sensex hits 10% lower circuit, trading halted for 45 minutes

Andrew Cummings
March 24, 2020

According to traders, extreme lockdown measures taken by the government in India and world over has put vast pressure on investor sentiment.

Indian stock markets crashed on Monday morning to almost 3,000 points or below 10 % halting the trade for second-time this month.

Investor sentiment in Asia improved in anticipation of a revival in demand from the economic giant, traders said. At 11.07 am Axis Bank saw a decline of 19 per cent, IndusInd 17.68 percent, ICICI Bank 14.61 percent and Bajaj Finance 14.42 per cent. The 30-share BSE platform jumped 693 points or 2.67 per cent higher to close at 26,674; while the broader NSE Nifty moved 191 points or 2.51 per cent up to settle at 7,801.

In the previous session, the BSE benchmark plummeted 3,935 points or 13.

The Sensex crashed by 4,000 points or 13.2 per cent to close at 25,980 points.

Meantime, the spike in volatility in the equity markets - the India NSE Volatility Index is near a multi-year high - and thousands in the financial industry working from home have led to questions about whether stock exchanges should remain open.

The Fed, which has already slashed interest rates to record lows, said it will buy unlimited amounts of Treasury debt and take steps to lend directly to small- and medium-sized firms hammered by restrictions across the country.

Other central banks are also expected to follow suit with bold measures to ease the severely strained credit and financial markets, experts noted.

As per traders, extreme lockdown measures taken by the government of India and authorities across the world has put vast pressure in investor sentiment.

Bourses in Shanghai, Hong Kong, Tokyo and Seoul rallied up to 7 per cent.

Over the weekend in India, the virus drove several companies to shut operations and the government sent states into lockdown, bringing normal life to a grinding halt. Rs 58 lakh crore investor wealth has eroded since its peak. The BSE Sensex fell 10 per cent, ie 2991.85 points to 26,924.11. In India, all domestic flights were suspended from midnight Tuesday as the government stepped up a nationwide lockdown after the number of coronavirus cases rose to 471 on Monday.

The Indian rupee slipped further by 95 paise to 76.15 against the U.S. dollar in opening trade on Monday amid sharp rise in Coronavirus cases in the country and heavy selling in domestic equities.

"If India manages to avoid exponential growth of Covid-19 in the next two-to-three weeks, then with today's fall, the market has priced in" the spread of the infection, said Chokkalingam G, head of investment advisory at Equinomics Research & Advisory Mumbai.

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