The markets, which were already being affected by low corporate results and pessimism toward economic growth, were further negatively influenced by the news that two instances of the Chinese-origin human metapneumovirus had been discovered in India early on Monday. Additionally, the local rupee continued to decline against the dollar.
On Monday, new virus fears combined with previous shaky signs sent the markets plunging, wiping off ₹11 trillion in investor value in a single day. The benchmarks, the NSE Nifty and the BSE Sensex, both fell more than 1.5%, while the fear measure, the Vix, increased by the largest in four months.The markets were already negatively hit by low corporate profits and pessimism toward economic development, and news of two instances of the Chinese-origin human metapneumovirus (HMPV) were discovered early Monday in India.
Sentiment was further impacted by banks' unimpressive quarterly reports over the weekend, which indicated slower credit growth. In its quarterly report for the third quarter of FY25, banking giant HDFC Bank revealed loan growth of 3% year over year, disappointing the markets.
As a result, foreign investors' sales and new derivatives shorting sent the Nifty and Sensex lower. The Sensex dropped 1.59% to settle at 77,964.99. The Nifty plummeted 1.62% to 23,616.05, below the critical 24,000 barrier.
The two benchmarks were pulled below their 200-day exponential moving averages (EMAs) of 23,700 and 78,056 by Monday's decline. Weakness is indicated by a decline below the EMA.
In the meantime, the rupee dropped 5 paise to close at a new low of 85.83 to the dollar, and the India Vix rose 15.58% to 15.65, indicating growing anxiety.
Notably, among emerging markets, Indian stocks suffered the most on Monday.
According to Andrew Holland, CEO of Avendus Capital Public Markets Alternate Strategies, "the decline was much more in India than in other markets, which makes the outbreak of the virus a negative on top of other negatives, like tepid quarterly updates by banks signalling lower loan growth, falling rupee, and economic growth concerns."
In fact, the only other significant index to decline was Japan's Nikkei 225, which ended the day down 1.47%. China's Shanghai Composite finished down just 0.14%, South Korea's Kospi settled 1.9% higher, and Taiwan's Taiex ended up 2.79%.
Regarding the effects of the new virus, Sanjeev Prasad, managing director and co-head at Kotak Institutional Equities, stated that any negative news tends to enhance the downside risks to Indian markets because valuations are costly.
Jyoti Jaipuria, the founder of Valentis Advisors, a portfolio manager, agreed. "Any new fear increases the risk, especially if earnings don't justify the valuations," he added, adding that India is the most costly of the emerging economies.
As a result, foreign investors' sales and new derivatives shorting sent the Nifty and Sensex lower. The Sensex dropped 1.59% to settle at 77,964.99. The Nifty plummeted 1.62% to 23,616.05, below the critical 24,000 barrier.
The two benchmarks were pulled below their 200-day exponential moving averages (EMAs) of 23,700 and 78,056 by Monday's decline. Weakness is indicated by a decline below the EMA.
In the meantime, the rupee dropped 5 paise to close at a new low of 85.83 to the dollar, and the India Vix rose 15.58% to 15.65, indicating growing anxiety.
Notably, among emerging markets, Indian stocks suffered the most on Monday.
According to Andrew Holland, CEO of Avendus Capital Public Markets Alternate Strategies, "the decline was much more in India than in other markets, which makes the outbreak of the virus a negative on top of other negatives, like tepid quarterly updates by banks signalling lower loan growth, falling rupee, and economic growth concerns."
In fact, the only other significant index to decline was Japan's Nikkei 225, which ended the day down 1.47%. China's Shanghai Composite finished down just 0.14%, South Korea's Kospi settled 1.9% higher, and Taiwan's Taiex ended up 2.79%.
Regarding the effects of the new virus, Sanjeev Prasad, managing director and co-head at Kotak Institutional Equities, stated that any negative news tends to enhance the downside risks to Indian markets because valuations are costly.
Jyoti Jaipuria, the founder of Valentis Advisors, a portfolio manager, agreed. "Any new fear increases the risk, especially if earnings don't justify the valuations," he added, adding that India is the most costly of the emerging economies.
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