Covid-19 / Nifty’s worst performance in 28 years; Sensex’s biggest fall this quarter; There is a possibility of loss in many sectors

This year the stock market has recorded a steady decline in the first quarter. The benchmark index has slipped by 31 percent during January to March 2020 this year. The epidemic of coronavirus is responsible for this decline in the market. A fall of 20 percent or more from the peak level of a stock or index is generally considered a beer market territory for that traded unit. The Nifty saw a 31.9 percent decline during the quarter, which is equivalent to a 32.2 percent decline during the June 1992 quarter. On the other hand, the Sensex declined by 28.1 percent during this period.

55,007 crore withdrawn from Indian equity

The Nifty 50 (dropped by 28.8%) and the Sensex (dropped by 26.5%) performed the worst in this financial year 2019 – 2020 (FY20) as of Monday, 30 March. Earlier in FY 2019, the S&P BSE Sensex had recorded a decline of 37.9 per cent. While the Nifty fell 36.2% due to Global Financial Crises (GFC). Foreign Portfolio Investors (FPI) pulled out 55,007 crore rupees (about $ 7.4 billion) from Indian equities in March 2020.

Currently, there is a 21-day lockdown in the country due to Coronavirus. As such, most analysts say that they are tracking the Covid-19 cases in the domestic and foreign markets. The market may decline due to lockdown.

BSE sector down by 46 percent

Benchmark indices including banks, non-banking financial companies (NBFCs), housing finance companies (HFCs) and insurance companies have seen a sharp decline during the quarter. The auto, metal and real estate sectors were also most affected by the decline. These sectors declined 42 per cent to 46 per cent. However, pharmacy and fast moving consumer goods company (FMCG) declined by 14 per cent during this period. While the information technology (IT) sector registered a decline of 21 per cent.

Many sectors will still have more damage

Varun Lohachab, head of Institutional Research at HDFC Securities, believes that lower revenue losses in IT, consumer staples, pharma and chemical sectors will be lower. At the same time, the telecom sector will also remain largely untouched. However, they may soon benefit from their demand. Right now sectors like Autoset, Retail, Entertainment, Eating and Aviation will have to be disappointed by the low demand. It will take time for them to become normal.

During the quarter, 114 stocks out of 538 stocks of the S&P BSE 500 and Nifty 500 have seen a decline in their market price. The list includes IndusInd Bank, RBL Bank, Bandhan Bank, Indiabulls Housing Finance, PNB Housing Finance, Vedanta, Hindalco Industries, Zee Entertainment Enterprises, Tata Motors and Oil & Natural Gas Corporation (ONGC). The other 221 stocks have lost between 30 per cent and 50 per cent.