Virus Eats Into The Global Markets

The impact of corona virus has been felt across the world with most indices getting weakened by the crisis even though the US remained an exception. 

During the recent fortnight, global markets were seen waiting for more clarity on the ongoing crisis of coronavirus. Even as China reported increase in deaths and patients of coronavirus, a few cases were also reported from other countries. Since China has extended the holiday period for the employees of its companies as well as put cities on lockdowns, the markets feared the business impacts of such actions.

However, the US markets were seen doing well as NASDAQ rose by 5.47 per cent followed by S&P 500 and DJIA increasing by 3.52 per cent and 2.60 per cent, respectively. One of the reasons that can be attributed towards the positive performance of the US markets is that it is expected that the number of corona virus victims will soon start to decrease. But before that happens, various companies are yet to completely asses the impacts they face due to the crisis, thus creating a slowdown in the business environment. Also, owing to the elections in November 2020, the markets were expected to be volatile but unless a single party sweeps the elections, the probability for significant policy shifts which lead to volatility is comparatively low. The European markets also witnessed growth as CAC40 DAX gained by 3.27 per cent and 3.20 per cent respectively. Hence, global markets apart from Asian markets witnessed a correction during the fortnight as FTSE 100 also rose by 1.18 per cent. Shanghai and Hang Seng continued to witness de-growth of nearly 2.89 per cent and 2.53 per cent, respectively, whereas Nikkei was up by 1.47 per cent.

During the last few weeks, domestic indices witnessed a flat performance. Sensex was up by mere 0.15 per cent while on the other hand, Nifty was down by 0.09. The mid-cap index was up 0.49 per cent but the small-cap index was down by 0.68 per cent. Auto companies continue to witness selling pressure post weak sales data for January 2020 which led the auto index to decrease by 4.32 per cent. Amongst the sectoral indices, realty and FMCG indices were also in the list of top losers as they fell by 3.37 per cent and 3.12 per cent, respectively. The metal index was down by 2.48 per cent as China restricted business activities at its ports due to the virus. Bankex increased by 1.63 per cent.

The trading data for FIIs and DIIs showed that for the fortnight under review, FIIs were net buyers to the tune of Rs. 8,529.45 crore and DIIs were net buyers to the tune of Rs. 7,945.05 crore. Gold price decreased by 0.38 per cent to  Rs. 41,790 for 10 grams for 24 carats in the last 15 days. Brent Crude prices slashed massively by 7.80 per cent to USD 54.01 per barrel as fears over destroyed demand from China, which is one of the largest importers of Brent Crude, loomed over the global economy along with a much broader economic damage from the mass quarantine on account of the corona virus. Despite the significant events globally, the Indian rupee settled at 71.28 against the US dollar on February 11, 2020, looking at the release of key macroeconomic data which could bring about some movement.