With the WHO declaring the deadly coronavirus as pandemic and India announcing its first confirmed death due to the virus, the Indian stock markets have been continually heading southwards. In a bid to contain the disease, the Indian government has suspended most visas. As per the latest reports, there are over 70 suspected cases of coronavirus in the country. With the acceleration of cases in South Korea, Italy and Iran, the investors the world over are worried.
On March 13, the Indian market recorded a drastic fall of 3000 points in the Sensex. The trading halted for 45 minutes on the National Stock Exchange (NSE) as the NIFTY index fell 10% within minutes of its opening. Since the year 2008, this is the first time that NIFTY index has breached the lower circuit. Filled with fear and uncertainty, the investors are worried. In the short run, due to this aggravation in the market, the margin calls and the stop losses are giving rise to panic selling in the market. This is causing a cyclical effect by further pushing the stock prices downwards. Commonly referred to as the fear index, the India VIX index
surged 30% to 41.32, which easily indicates the nervousness among the investors.
As the scare of the deadly virus grows around the globe, the foreign investors have pulled out $2 billion from the Indian stock market. The effect can be seen on the falling rupee. According to analysts, if the present sentiment persists, the rupee would see an all time low. Experts believe that this might be the beginning of the Great Recession. Unfortunately, if this scenario comes true, then investors will loose money .
But if the virus is controlled, the scenario will be different. There will be no need for the
long-term investors to panic as the broader fundamental backdrop of low Interest rates and
Economic expansion will cause the Bull market to persist as we advance through 2020.