On a month-to-date basis, the markets are down 22%, while the India VIX has more than doubled, signalling extreme anxiety.
Investors may have to brace for more pain as selling pressure could extend with India entering a virtual shutdown phase to contain the spread of COVID-19. Already, foreign portfolio investors’ selloff in March hit a record of $6.24 billion (Rs 46,200 crore). This is far in excess of $4.4 billion outflows seen in January 2008 due to the global financial crisis.
Analysts say the market bloodbath is worse than in 2008. Last week, investor sentiment was crushed with the Sensex dropping as much as 17% before recovering sharply on Friday to end the week with a 12% deficit. On a month-to-date basis, the markets are down 22%, while the India VIX has more than doubled, signalling extreme anxiety.
“Many nations may have to eventually adopt harsh steps to contain the pandemic. However, such extreme measures, though desired, will result in extreme short-term pain for several parts of the economy,” Sanjeev Prasad, co-head, Kotak Institutional Equities, said.