Indian stocks suffered their worst-ever day of trading on Monday, March 23, as the government announced mandatory lockdowns in a number of major cities to prevent the spread of Covid-19.
Seventy-five districts across the vast country, including major cities such as Bombay, Bangalore and the capital New Delhi, have been put under quarantine until the end of March at the earliest.
Bombay’s BSE Sensex index fell by 3,934 points, while the country’s leading index, the NIFTY 50, plunged by 12.98 per cent to its lowest point since October 2016. While both indices gained in Tuesday trading, closing up 2.51 and 2.67 per cent respectively, the outlook still seems bearish in the short to medium term.
As in other nations, India’s auto sector has particularly suffered, with almost all manufacturers suspending production. In the past five days Bajaj Auto and Maruti Suzuki have fallen by 14.98 and 19.96 per cent respectively.
With the number of confirmed coronavirus cases surpassing 500, investors, both domestic and foreign, fear more stringent quarantine measures.
An extended suspension of a workforce of more than a billion people would take a major toll on India’s already-fragile economy and the wider world. There are doubts as to what extent a potential stimulus package could counter the effect of such a slump in productivity.
More importantly however, there are fears that the number of confirmed cases in the world’s second-largest country is so comparatively low only due to a lack of test kits and that India could be facing an internal crisis.
The Indian rupee (INR) hit a record low on the dollar, surpassing 76. In light of the ongoing economic and social uncertainty, the Reserve Bank of India has asked all state-owned banks to extend emergency credit lines to corporate borrowers.
With prime minister Narendra Modi set to address the nation later today, investors along with everyday Indians will be paying close attention as the Covid-19 crisis threatens further social and economic disruption.