Indian stock indices tumble amid global selloff, COVID-19 spreading

The Indian stock market witnessed a bloodbath on Thursday, in line with the global selloff, with the BSE Sensex losing 1,114.82 points. Post Thursday’s selloff, Sensex lost 2,292 points in the last four sessions. This was the sixth consecutive session of loss for the Indian indices.

This was the biggest single day fall for the BSE Sensex in four months and the biggest losing streak (6 sessions) in seven months.

The Nifty50 on the National Stock Exchange (NSE) fell well below the psychological 11,000 mark.

The recent bear run has been due to resurgence in coronavirus cases across the world, largely in Europe and anticipation of fresh lockdown restrictions across several countries in the continent including the UK and France.

The BSE Sensex closed at 36,553.60, lower by 1,114.82 points, or 2.96 per cent, from the previous close of 37,668.42.

It had opened at 37,282.18 and touched an intra-day high of 37,304.26 or a low of 36,495.98 points.

The Nifty50 closed at 10,805.55, lower by 326.30 points or 2.93 per cent from its previous close.

US dollar strengthened against Indian rupee and traded at 73.90. UAE dirham is traded at 20.09 against Indian rupee.

Manish Hathiramani, technical analyst, Deen Dayal Investments, said: “The support level of 10,900-10,950 has been disrespected during today’s trading session. We have also pierced 10,882 which was made on August 3, 2020. This opens a new target of 10750. Any bounce can be utilised to short the Nifty for this target.”

Among the sectors, auto, banking, metal and IT indices lost the most.

Meanwhile, in a bid to make fundraising through rights issues faster and cost effective, the Securities and Exchange Board of India (SEBI) on Wednesday rationalised norms and the eligibility criteria and regulations for such issues.

Post the amendments, the issuer shall be eligible to make truncated disclosures in terms of “where it has been filing periodic reports/statements/information in compliance with Listing Regulations as applicable” for the last one year, instead of the last three years as required earlier and also regarding “where three years have passed after change in management pursuant to acquisition of control or Listing consequent to a scheme of arrangement”.

“SEBI has decided to amend SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 to rationalise eligibility criteria and disclosure requirements for Rights Issues’ with an objective to make the fund raising through this route easier, faster and cost-effective,” a SEBI statement said.

The SEBI has also increased the threshold, from Rs 10 crore to Rs 50 crore, for filing requirement of rights issue draft letter of offer with the Board for its observations.

In another relief, the regulator has decided that “mandatory 90 per cent minimum subscription criteria for rights issue shall not be applicable to those issuers where object of the issue involves financing other than financing of capital expenditure for a project, provided that the promoters and promoter group of the issuer undertake to subscribe fully to their portion of rights entitlement”.

The issuer shall be eligible to make Fast Track Rights Issue, in case of pending show-cause notices in respect to adjudication, prosecution proceedings and audit qualification, provided that necessary disclosures along with potential adverse impact on the issuer are made in the letter of offer, the SEBI said.

Separately, the path to recovery will be more painful for emerging markets such as India and the banks’ recovery to long-term averages for key asset quality and profitability ratios will take years, S&P Global Ratings said.

India, Mexico, and South Africa are among the banking systems that will be slower to recover to 2019 levels-likely beyond 2023, according to S&P Global Ratings.

COVID-19 and the oil price shock of 2020 are taking a heavy toll on global banks. “S&P Global Ratings has taken 335 negative rating actions globally since the outbreak began, and we anticipate it will be difficult for the financial strength ratings on financial institutions to return to pre-crisis levels. We don’t expect the world’s largest banking sectors, including more than half of G20’s, to recover to pre-Covid-19 levels until 2023, or beyond,” the agency said.

The recovery for some other jurisdictions will likely be much further out. For India, Mexico and South Africa, a recovery to pre-COVID-19 levels may not arrive until after 2023.

India, among these late-exiter banking jurisdictions are those jurisdictions where COVID-19 and other stresses have already had a meaningful negative effect.

Indo-Asian News Service