By Linus Garg
First publised on 2020-02-28 20:30:02
In line with the bloodbath on all the stock exchanges across the world, the Indian stock market indices plunged heavily today to send shivers across the spines of investors. The Sensex plunged by 1448 points which are the equivalent of 3.64% while the Nifty slid by 432 points or 3.71%. It meant that in a single day, investor wealth of over Rs 5.5 lakh crore was wiped out. In the last six trading sessions, the Sensex has lost a combined 2872 points.
Across the globe, investors are worried that the rapid spread of Covid-19 to more and newer places means that there will be a huge global economic slowdown and business will suffer. People are worried that since Chinese products will be shunned, those economies that import components from China will be immediately affected. They are also worried that the US and other Western nations, consumers of high-end products from many countries, will postpone orders and it will have a multiplier effect on the slowdown. These fears have allowed the bears to tighten their grip on markets worldwide.
Not that the fears are unfounded. With deaths running into thousands in mainland China and newer cases being reported in countries such as Iran, South Korea and Italy, there is no saying how, and how fast, the virus will spread in the coming days. At least 48 countries have until now reported confirmed cases. Since there is no immediate antidote available for the virus, the response of the authorities in each country is also not predictable. The fight against the virus is going to take up resources and time throwing business activity out of gear. Hence, investors are feeling the jitters and most are selling short to limit their losses. In such a scenario, the immediate outlook is bleak and it will take a while before the market bottoms out.