Equities plunged to new lows on Monday as benchmark indices posted their biggest single-day fall. Foreign investors are continuing to liquidate holdings amidst the belief that the lockdowns would eventually lead to a financial crisis. Shedding 3,500 points during the day, Nifty Bank clocked the biggest among all frontline indices. Financials contributed 50% towards the fall in Nifty. Investors lost wealth worth Rs 14.2 lakh crore after the market sell-off during Monday's bloodbath.
Foreign portfolio investors have been selling relentlessly and have sold equities worth $8.1 billion between February 24 and March 19, 2020. The rupee ended the day at a record low of 76.29 against the US dollar. According to the provisional data on the exchanges, FPIs on Monday sold equities worth $ 392 million. Domestic institutional investors bought equities worth $ 142.28 million, data on the exchanges shows.
Even as the Sensex and Nifty are down over 38% from their January highs, experts are not willing to call this a bottom yet as the wave of selling is expected to continue. Sectorally, the biggest losers were Nifty Private Bank, Nifty Bank, Nifty Financial Services, Nifty Auto and Nifty PSU Bank. NSE Midcap ended the day at a six year low down by 13.01% similarly, NSE smallcap was down by 12.94%.
Piyush Garg, chief investment officer at ICICI Securities, said: "The market is pricing in a new reality. The understanding is that a healthcare crisis could transform into a mini financial problem. This cycle could start with retail. Financials were over-bought and that's coming down now. If the current conditions last till June or July, then retail assets will come under stress."
HDFC Bank CEO Aditya Puri came out to allay fears on Monday, but investors continued to pummel financials. Despite measures announced by the markets regulator on Friday to curb volatility, markets hit a lower circuit for the second time in two weeks. The benchmark Sensex crashed 3,934.72 points or 13.15% to close at 25,981.24, which is the lowest in three years. Broader Nifty50 ended the day's trading session at a four-year low of 7,610.25 points, down by 12.89%.
After hitting the lower circuit in the first hour of the trading session, the selling continued even after trading resumed. The India volatility index (VIX) remained elevated at 71.56. Foreign portfolio investors (FPIs) have remained net sellers in the Indian equity markets and have pulled out $6.67 billion from the equity markets till March 20. They have so far pulled out around $13 billion from the Indian debt and equity markets making it the highest ever outflow.
According to a market expert, the FPIs are selling but domestic institutional investors could have reduced buying. "FPIs are continuing selling but domestic institutional investors could have become wary and reduced buying. Additionally, there is some news that the market could be shut given the lockdowns in the country and so, many participants must be preferring to sit on cash," the market expert said.
Globally, bourses in Hong Kong, Shanghai and South Korea were trading in the red. South Korea's Kospi was down 5.34%, Hong Kong's Hang Seng was down 4.86% and Shanghai Composite was down by 3.11%. Stock exchanges in the United Kingdom, France and Germany were trading in the red. Dow jones Mini futures which was down 900 points which led to US markets trending lower.
All the stocks on Nifty50 ended the day in the red from which the biggest losers were Axis Bank, Bajaj Finserv, IndusInd Bank, Bajaj Finance and Zee Entertainment. Axis Bank ended the day down by 27.6% to close at Rs 310 which is the lowest six years.
Additionally, Bajaj Finserv was down by 27.48% and IndusInd Bank was down by 23.92%, which is an eight-year low for the private bank. Bajaj Finance was trading at its 16-month low, down by 22.73%. The 50-share index was dragged by HDFC Bank and Reliance Industries, which pulled the index down by 100 points each. Reliance Industries and ICICI Bank were trading at a two-year low of Rs 891 and Rs 282.40, respectively.