InvestorQ : How do you see the COVID-19 impacting the Indian financial markets, especially the Nifty and the Sensex in the coming days?
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How do you see the COVID-19 impacting the Indian financial markets, especially the Nifty and the Sensex in the coming days?

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Dia Deshpande answered.
1 year ago
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Between Jan 2020 and March, the Sensex and Nifty lost almost 33% from the highs, with most of the correction coming only in the last 2 months time frame. That was largely attributable to COVID-19. In fact, the BSE Sensex witnessed a sharp fall in the stock market on March 23, 2020 due to the Coronavirus fear across the global market. The Sensex plunged 3500 points after hitting its 10% lower circuit limit. On the other hand, the NSE Nifty fell 11 percent to below 7800. It has touched a low of 7610, which has been held since then. Even on March 18, Sensex fell by 1709 points and Nifty slipped 425.55 points (4.75%). One of the reasons for this crash has been that COVID-19 has led to risk-off approach from FPIs and that has led to FIIs continuously withdrawing money from the Indian market. On the other hand, the Supreme Court's decision affected the shares of banking companies the most, because these banks have huge debt on telecom companies and the SC has refused any relief for telcos.

The first big plunge on the Indian stock markets was seen on March 11, 2020 after WHO declared COVID-19 virus as a global pandemic. The declaration triggered travel bans globally with the US President Donald Trump banning travel from European countries for 30 days and India suspending all tourist visas till April 15, 2020. This led to the Sensex and Nifty crashing by nearly 7%. The aviation stocks were the worst hit, as shares of industry majors including Spicejet and InterGlobe Aviation fell by almost 19 percent after the travel ban imposed by the central government. Hospitality stocks also took it on their chin. Interestingly, most of the large and profitable banks like HDFC Bank and Axis Bank were among the losers as the slumping market is likely to lead to repayment concerns for companies after supply chains and demand chains got badly disrupted due to the lockdown. Also, Indian industry has a major dependence on China for supply chain and that has been badly hit.

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