Markets sink in deep red as coronavirus pandemic fears intensify

Indian equity benchmarks continued to trade deeply in red in the early noon session amid rising uncertainty over the economic impact of coronavirus outbreak. All sectoral indices on BSE were witnessing heavy selling with metal and basic materials remaining top losing indices, trading down by 5.85% and 4.04% respectively. Sell off also continued in broader indices with both mid cap and small cap indices trading down by over 3% each. The mood on the street got impacted as the carnage in the equity market wiped out investors wealth worth Rs 4,65,915.58 crore, taking the total m-cap to Rs 1,47,74,108.50 crore on the BSE. The m-cap of BSE-listed companies stood at Rs 1,52,40,024.08 crore at the end of trading on Thursday. Sentiments further cooled off as, Industry body PHDCCI said that the coronavirus outbreak may negatively impact global growth by 30 basis points or $250 billion. Meanwhile, foreign investors have sold equities worth Rs 9,389 crore till Thursday, provisional data on the stock exchanges showed. On the BSE, 1,602 scrips declined, while 183 advanced and 62 remained unchanged.

On the global front, Asian equity benchmarks are trading in red, owing to rapid withdrawal of funds by participants followed by the intensified spread of coronavirus and on concerns that how the virus outbreak might hurt the global economy. Closer home, the market breadth on BSE was negative, out of 2250 stocks traded, 302 stocks advanced, while 1845 stocks declined on the BSE, while 103 stocks remain unchanged.

The BSE Sensex is currently trading at 38619.00, down by 1126.66 points or 2.83% after trading in a range of 38551.54 and 39087.47. There was 1 stock advancing against 29 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 3.25%, while Small cap index was down by 3.29%.

The top losing sectoral indices on the BSE were Metal down by 5.85%, Basic Materials down by 4.04%, IT down by 3.71%, Industrials down by 3.66% and Realty was down by 3.61%, while there were no gainers on sectoral indices.

The only gainer on the Sensex was NTPC up by 0.37%. On the flip side, Tata Steel down by 8.25%, Bajaj Finance down by 6.51%, Tech Mahindra down by 4.82%, Infosys down by 4.07% and HCL Tech was down by 3.63% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has revised its outlook on the steel sector from 'stable-to-negative' to 'negative' for the next financial year (FY21), given the modest steel demand growth expectations of 5 percent and margin pressures led by iron ore price risks. It also said high iron ore premiums for new mine owners both captive and merchant could shift the cost positions of steel mills. The slowing economic activity as reflected in Ind-Ra's GDP estimates of 5 percent and 5.5 percent for FY20 and FY21, respectively, would continue to affect demand growth in the steel sector and any significant pick-up is unlikely.

Ind-Ra also expects steel demand growth to remain modest, in line with gross factor capital formation of 5.3 per cent in FY21. It also said the Chinese steel demand growth risks amid increased ramifications from the corona virus outbreak could also impact global and domestic steel prices. However, it said some benefits are also expected on softer imported coking coal and international iron ore prices. It added that global steel prices may come at risk, if Chinese steel producers could not reduce production growth in FY21 in line with the reducing demand in housing construction and the slowing Chinese economic growth.

The agency further expects the overall steel margins to remain modest in FY 2020-21, with slight improvements after the industry witnessed EBITDA margins dropping. However, it expects the margins to bottom out in Q4FY20. It also believed that in case the steel demand does not strengthen up by 2HFY21 (second half of FY 2020-22) new capacity additions along with stressed asset ramp-up could put further pressure on the prices and plant capacity utilisation rates.

The CNX Nifty is currently trading at 11283.20, down by 350.10 points or 3.01% after trading in a range of 11269.80 and 11384.80. There were no stocks advancing.

The top losers on Nifty were Tata Motors down by 9.19%, Vedanta down by 8.81%, Tata Steel down by 8.37%, Bajaj Finance down by 6.63% and Yes Bank down by 6.25%.

All Asian markets were trading lower; Hang Seng decreased 692.18 points or 2.58% to 26,086.44, Nikkei 225 slipped 997.06 points or 4.54% to 20,951.17, Jakarta Composite lost 223.73 points or 4.04% to 5,311.96, Straits Times trembled 87.88 points or 2.82% to 3,023.82, KOSPI fell 70.48 points or 3.43% to 1,984.41 and Shanghai Composite was down by 85.33 points or 2.85% to 2,906.00.