Benchmark equity indices BSE Sensex and NSE Nifty tanked over 6 per cent in Mondays early trade due to panic selling amid the coronavirus pandemic.The 30-share Sensex traded 2,182 points, or 6.40 per cent, down at 31,921 at around 9.35 am, while the 50-share Nifty slipped 616 points, or 6.20 per cent, to 9,339.Mondays crash wiped out over Rs 6 lakh crore of equity investors' wealth within first 15 minutes of trading.
Amit Gupta, co-founder and CEO, TradingBells said, It is best for investors to stay away from this market for a while till the time the volatility settles and we can see some notable reversals.Here is what caused the massive selloff:Fed rate cut: Global markets took a hit after the US Federal Reserve slashed its key interest rate to shore up economic growth in the face of mounting global anti-virus controls that are shutting down business and travel.
The US Fed cut rates back to near zero, restarted bond buying and joined other central banks to ensure liquidity in dollar lending.
Asian peers Hang Seng and Shanghai were down up to 2.50 per cent in mornings trade.According to experts, a surprise 100 points rate cut by the US Federal Reserve is likely to scare investors more than cheering them as it reflects the fear among US policy makers about the severe impact of the virus outbreak on the worlds largest economy.
Coronavirus scare: Market sentiment in India further deteriorated after the number of novel coronavirus cases in the country rose to 110 on Sunday, with Maharashtra reporting the highest followed by Kerala.
Over 450 stranded Indians were flown back from Italy and Iran, the two worst-affected countries after China, and quarantined.India Inc under pressure: Credit pressures have intensified on India Inc as the coronavirus spread deepens in the country and across the globe, leading domestic credit ratings agency Crisil said on Friday.
Airlines, hotels, malls, multiplexes and restaurants will be the worst hit businesses, it warned.FII outflows: Market participants are also concerned as foreign portfolio investors (FPIs) have withdrawn over Rs 35,000 crore on a net basis from the domestic markets in March so far amid the coronavirus pandemic triggering fears of a global recession.Inflation fear: Traders are also cautious ahead of the Wholesale Price Index (WPI) data to be out later in the day.
Besides, the government had hiked the excise duty on petrol and diesel by Rs 3 per litre each to garner about Rs 39,000 crore additional revenue, as it repeated its 2014-15 act of not passing on gains arising from slump in international oil prices.
Higher fuel prices may bring back fears of spike in inflation.