The woes for the investing community may not be over as market experts fear that there could be more volatile days ahead for equities as they confront adverse global developments like the rapidly spreading coronavirus and further fall in crude oil prices.
This comes even as close to Rs 7 lakh crore of investor wealth was wiped out in today’s trading as domestic shares joined a global rout triggered by a massive fall in crude oil prices amid lingering fears over the impact of the coronavirus.
Market capitalisation of BSE-listed companies saw a massive plunge after the Sensex tanked over 2,467 points during the day.
The benchmark index later settled 1941.67 points, or 5.17 per cent lower, at 35634.95 during the day.
The carnage took out investor wealth worth Rs 6,84,277.65 crore, taking the total m-cap to Rs 1,37,46,946.76 crore on the BSE.
Though some of market mavens feel that the sell-off here has been overdone and that investors should now start looking at specific stocks, there are others who are advocating that they should wait for some stability before taking the plunge.
With crude oil prices crashing, the largest impact was fell in the shares of Reliance Industries Ltd (RIL), whose market capitalisation fell below Tata Consultancy Services.
At the BSE, the RIL share plummeted by 12.35 per cent or Rs 156.90 at Rs 1113.15.
The crash saw its market cap falling to Rs 7,05,655.56 crore. As a result, Tata Consultancy Services (TCS) became the most valued firm with a market cap of Rs 7,40,045.31 crore.
ForReliance Industries Limited, the crash in crude oil prices which is set to adversely affect the oil producing nations comes at a time a proposed deal with Aramco in its oil to chemicals business is yet to fructify. This could impact its plans of being a net debt free firm by March 2021.
“The markets ended sharply lower on Monday after a gap down opening on the back of global sell-off in equities and commodities.
A recovery from the lows helped the main indices to curb the losses to a certain extent,” Deepak Jasani, head retail research, HDFC Securities said.
He added that the domestic markets are facing a deluge of negative triggers and that while global markets are plunging after the break of an alliance between OPEC and Russia, stocks could remain under pressure in the short-term.
“Technically, with the Nifty moving down further, the short-term trend remains down. The Nifty could test the recent lows of 10295-10138 in the coming sessions. Any pullback rallies could find resistances at 10637-10744,” he added.
An analyst from a foreign brokerage added that though the possibility of a recovery in stock prices when the markets resume trading on Wednesday cannot be ruled out, retail investors should remain on the sidelines and wait for stability before looking to invest. ``While equity price movements will now be determined by factors like whether the coronavirus is spreading, what further actions Saudi Arabia takes, investors should now remain patient and not enter at the current levels. They should be stock specific and when they re-enter,” he added.
A key concern for the investing community is that foreign portfolio investors (FPIs) remain on the exit mode.
Provisional data from the NSE today showed that they sold close to Rs 6600 crore of stocks. In this month, these investors have sold almost Rs 12,500 crore of stocks and market circles are of the view that the sale could continue as they flock to save haven assets.
