Investors’ risk appetite took a beating after South Korea issued a high alert, given the number of cases has now risen to 833. In Italy, reports suggested the number of cases has jumped to over 150 in just three weeks. The outbreak in Europe has prompted the Italian government to impose a lockdown in an area of 50,000 people near Milan. Authorities have also cancelled the remaining days of the Venice carnival, while universities were shut.
Hong Kong’s Hang Seng fell 1.8 per cent, with Germany’s DAX shedding 3.8 per cent, the UK’s FTSE closing down 3.6 per cent, and France’s CAC losing 3.9 per cent. Investors fled to safe assets such as gold. Gold prices in India rose Rs 1,840 or 4.4 per cent per 10 grams to Rs 43,415, recording the highest ever single-day gain.
The Dow was also trading down 1,073 points, as of 11:50pm (IST).
“People are worried about the virus spreading, which will lead to further slowdown globally,” said Jyotivardhan Jaipuria, founder of Valentis Advisors. Metal and automobile stocks lost the most, with their sectoral indices dropping 5.71 per cent and 3.4 per cent, respectively.
Analysts said outbreak in Europe had rattled investors who, till now, had seen it as a situation confined to Asia.
“The fact it has spread to Italy, which is far from China, is worrying. If this prolongs for another three months, supply chains across the world will suffer, impacting India too. The automobile, electrical and pharma industries could suffer,” said Saurabh Mukherjea, founder of Marcellus Investments.
Deepak Jasani, head (retail research), HDFC Securities, said with little signs of the situation easing, there were concerns of a much longer-term impact on the global economy, with a number of companies having warned about their bottom line.
In the Sensex
pack, Tata Steel dropped the most at 6.4 per cent. ONGC and Maruti Suzuki were other laggards, declining 4.72 per cent and 4.24 per cent.
On an overall basis, 1,796 stocks declined, and 726 advanced on the BSE.
Foreign portfolio investors (FPIs) sold shares worth Rs 1,161 crore while domestic institutional investors bought shares worth Rs 516 crore.Market participants said besides the virus outbreak, investors will keenly look for signs of recovery in corporate earnings. “We are grappling with the effect of lacklustre earnings growth and, other than the tax cuts, there has been no tangible sign of a revival,” said Mukherjea.