Markets were in a really bad shape last week and just about managed to recover some ground on Friday. They lost on the first four days of the week. BSESENSEX lost 4,187.52 points or 12.28% to close at 29,915.96 points while NIFTY was down 1,209.75 points or 12.15% to close at 8,745.45 points. The broader markets saw BSE100, BSE200 and BSE500 lose 12.08%, 12.02% and 12.23% respectively.

Markets have been falling with one single concern which is the rapid spread of covid-19. The virus which spreads amongst humans coming in contact at a massive speed has already seen more than 14,600 deaths globally as of date and the number is rising. In India, the Prime Minister had called for a ‘Janata Curfew on Sunday the 22 nd of March from 7 am to 9 pm with just one intention, to slow the spread of the virus. The virus apparently remains active for 12 hours and needs to be transmitted before that for it to cause any further damage. This ‘curfew’ is for 14 hours and aims at breaking the chain. In many states the curfew has been extended beyond the 14 hours.

At the outset, let me offer my apologies for getting the market bottom wrong last week. We broke that bottom this week and have rallied back to a higher level than the low made on Friday last, but are not yet out of the woods. Global markets have been under extreme pressure and the Dow Jones is no exception. It lost 4,011.64 points or 17.30% to close at 19,173.98 points.

The Indian Rupee was under pressure and lost Rs 1.44 or 1.95% to close at Rs 75.18.

The banking sector was under severe pressure and one saw the likes of IndusInd Bank lose Rs 364.05 or 45.28% to close at Rs 439.95. ICICI Bank was down 22.74% while HDFC Bank lost Rs 17.65%. Similarly, Bajaj Finance was down 25.08%. On the other hand, shares of Yes Bank gained Rs 20.35 or 79.65% to close at Rs 45.90.

Nothing has happened to hit the blue chip BFSI space so badly but it is the relentless selling by FPI’s who have a dominant ownership in these shares. With their selling, there are no buyers for these blue chips in the quantity of their sales, hence prices just fall. Domestic institutions have bought some of these stocks but beyond a point it is difficult.
Shares of hyped SBI Card had a horrid listing on Monday the 16th of March. The shares debuted at Rs 658 against the issue price of Rs 755 and just about managed to touch the issue price for a second. It may be mentioned that in the unofficial grey market the premium on this stock had touched Rs 370-380, The joke doing the rounds of Dalal Street was that the share touched the issue price to save embarrassment for the top brass of State Bank of India, the promoter of the company SBI Card who were present for the listing ceremony in large numbers. The issue closed the day at Rs 683.20, down 9.51%. It recovered during the week to close at Rs 724.20, a loss of 4.08%. I hope the key takeaway from this issue is that anything that gets hyped beyond reasonable limits is a sitting duck for disaster.

The other primary market issue from Antony Waste Handling Cell was withdrawn without making any further headway after the issue was extended. It would have made more sense for the issue to have been withdrawn rather than extending by a week if there was no plan B.

The week ahead sees March futures expire on Thursday the 26th. Currently the bears have a huge upper hand which just cannot be challenged. While the bulls should be able to reduce the difference by some amount, the lead is a massive 2,887.85 points or 24.82%.

While disruption of supply chain has ceased to be a matter of concern and only protection of human lives and saving the spread of covid-19 is now being talked about, it becomes important to understand what the epicentre of this crisis, Wuhan in China did. They are now virtually covid-19 free and are fast returning to normalcy. It is breaking the chain which is of paramount importance.

While India is a vast country and isolating people is a challenging task, the attempt being made yesterday of Janata Curfew will go a long way in helping and educating the people. Many more such days may have to be followed to isolate the same. One other thing to learn from Italy and Spain is that the spread happens from overconfident people who believe that nothing can happen to them. Let the markets be and take care of your health, other things will follow.

Markets are likely to take a breather from the huge meltdown that we have seen over the last fortnight in the latter part of the week. The recovery will be a slow one and will have sharp two-sided movements as well. Brace yourself and conserve cash.