Volatility rocks equity markets; trading halted

The recovery in the markets was primarily led by strong buying by domestic institutional investors

A woman wearing a protective face mask walks by the investment icon bull statue on display outside a bank in Beijing, Tuesday, March 10, 2020. Asian stock markets took a breather from recent steep declines on Tuesday, with several regional benchmarks gaining more than 1% after New York futures reversed on news that President Donald Trump plans to ask Congress for a tax cut and other quick measures to ease the pain of the virus outbreak. (AP Photo/Andy Wong)

Friday saw extreme volatility on the Indian equity markets with the benchmark Sensex trading in a range of almost 5,400 points and the Nifty hitting its lower circuit breaker of 10% leading to a trading halt of 45 minutes, before ending with a gain of 3.81%.

Minutes after the start of the trading session on Friday , the Nifty’s plunge to a low of 8,555.15 led to suspension of trading in both exchanges for 45 minutes.

52-week low

The resumption of trading, however, saw buying support for stocks most of which are currently trading at their 52-week lows with growing concerns over the global impact of the COVID-19 pandemic.

The Sensex, which had touched a low of 29,388.97 during the morning session, rebounded to a high of 34,769.48 before closing at 34,103.48, up 1,325.34 points or 4.04%. The broader Nifty settled the day at 9,955.20, gaining 365.05 points or 3.81%.

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The recovery in the markets was primarily led by strong buying by domestic institutional investors led by LIC as the net buying by such entities was pegged at nearly ₹5,900 crore on Friday, as per BSE data.

On the other hand, foreign portfolio investors continued selling shares in huge numbers with the day’s off-loading totalling ₹6,027.58 crore.

On Thursday, FPIs were net sellers at nearly ₹3,500 crore.

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Sector heavyweights and bluechips like TCS, Tata Steel, Reliance Industries, Tech Mahindra, Axis Bank, ONGC and State Bank of India were all trading more than 10% lower as the markets hit their lower circuit for the first time in 12 years.

“Concerns on the spread of COVID-19 specially in EU and the resultant impact on travel, tourism and business has impacted sentiment leading to high FII selling in Indian equity markets,” said Chandraprakash Padiyar, Senior Fund Manager, Tata Asset Management.

He added that the markets seem to be closer to the bottom of the ongoing correction phase.

Elsewhere in Asia, Japan's Nikkei lost over 6% or 1,128 points while the benchmarks of Malaysia, South Korea and Taiwan lost between 2% and 6% each.