Performance perspective of Indian Equity Market

Shashikant Singh / 6-Mar, 2020

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Performance perspective of Indian Equity Market

The Indian equity market, which was already struggling from the impact of the coronavirus, has another event to deal with. The board of, one of the private lenders, Yes Bank on the verge of collapse, has been superseded. The impact of this event is equity markets have tanked and equity indices are trading more than three per cent lower than yesterday’s close.

While coronavirus continues to spread and its spillover has been felt in different fields. Latest being the sequel of James Bond, the release of which has been delayed. By the end of March 5, 2020, around 94,000 confirmed cases worldwide have been reported. India, which has largely remained unaffected until a few days ago, is seeing a surge in the cases of infected persons from the virus. There are 28 cases reported in India till March 4. In addition to this, new cases were also reported in New York, Los Angeles, South Korea, Iran and Malaysia. The situation is so grave that European finance ministers warned that the outbreak may plunge France and Italy into recession.

The stock market has remained quite volatile on whether COVID-19 global or local and moreover, Indian economy being not so interconnected to the world, is witnessing far more volatility and an ultimate fall. MSCI India Index, which is designed to measure the performance of the large and mid-cap segments of the Indian market, has underperformed the other major emerging economies’ equity market.

MSCI Index	Day (in per cent)	MTD (in per cent)	3MTD (in per cent)	YTD (in per cent)
INDONESIA	4.6	6.6	-9.6	-9.6
MALAYSIA	1.5	1.4	-8.9	-8.9
INDIA	0.1	-0.2	-8.3	-8.3
KOREA	3.1	6.2	-6.8	-6.8
ARGENTINA	3.4	5.1	-6.1	-6.1
TAIWAN	0.9	2.0	-4.7	-4.7
PAKISTAN	-0.5	3.0	-4.5	-4.5
EM ASIA	1.3	3.1	-4.4	-4.4
EM FAR EAST	1.4	3.5	-3.	-3.9
MEXICO	1.1	7.4	-2.1	-2.1
CHINA	1.0	3.1	-0.9	-0.9

The situation has worsened in the last few days after new cases of Coronavirus have been discovered in India and Yes Bank debacle. After which, it has underperformed every other market.

Besides underperformance, what is also worrisome is the volatility in the market, which many times remains a precursor to the major market fall. The following graph shows how major volatility in the equity market is followed by a fall in the market.