Bank stocks drag Sensex 674 points lower; Nifty below 8,100

Mumbai: Benchmark equity indices declined on Friday, led by losses in bank stocks, on concerns that the fast-spreading coronavirus pandemic and the nation-wide lockdown could push the economy into a recession.

The 30-share Sensex closed 2.39 per cent or 674 lower at 27,591, while the 50-share Nifty tumbled 2.06 per cent or 170 points to close at 8,084.

Moody's Investors Service on Thursday changed the outlook for Indian banking system to negative from stable, as it expects a deterioration in banks' asset quality due to disruption in economic activity from the coronavirus outbreak. It said banks' asset quality will deteriorate across the corporate, small and medium enterprises and retail segments, leading to pressure on profitability and capital.

A surge in crude oil prices on Thursday also impacted sentiment as India imports around 80 per cent of its crude oil requirements. Benchmark Brent crude oil futures rose above $30 a barrel, with hopes of a huge global supply cut deal to support prices still alive.

Markets at a glance
Despite the plunge, the market breadth was neutral with gainers and losers nearly equal in number.

BSE Midcap and BSE Smallcap indices fared better than the benchmark, and dropped 1.17 per cent and 1.03 per cent, respectively.

BSE Bankex (down 5.39 per cent) was the top sectoral loser, with all constituents deep in the red, following Moody's downgrade of the sector.

Private lenders RBL Bank, Axis Bank and IndusInd Bank tumbled 15.52 per cent, 9.16 per cent and 8.49 per cent, respectively.

BSE Healthcare index was the top gainer and advanced 3.56 per cent.

A total of 22 Sensex stocks closed lower with financials as the top drag. ICICI Bank, HDFC and SBI shed 8.01 per cent, 5.92 per cent and 5.36 per cent, respectively.

Sun Pharma, ITC and ONGC were among the top gainers in the 30-pack Sensex.

Analysts’ views
"The Indian markets opened and stayed negative, with reduced volatility. A ratings downgrade for the Banking sector, due to the impact of Covid-19 and ensuing stressed asset concerns, impacted the financial stocks. FIIs were net sellers to the tune of Rs.1100 Crores, on April 1, and show no signs of reversal. Markets are trading uncertainty, regarding the spread of the virus in India, as hope emerged of infections peaking in some of the worst affected global markets.”
- Vinod Nair, Head of Research at Geojit Financial Services

Global markets
European stock markets sank on Friday, erasing meagre gains for the week, as more companies flagged a hit to business from the coronavirus pandemic while oil prices extended their previous day’s gains on hopes of a global supply cut, Reuters reported.

The pan-European STOXX 600 index was down 0.4 per cent by 0749 GMT, taking MSCI’S All Country World Index down 0.3 per cent.

Asian shares also logged declines with MSCI’s Asia-Pacific index outside Japan declining 0.6 per cent.