Nifty Breaches 8500 Levels: Factors Responsible For Continuing Sell-Off

While Indian markets in early trade stood strong on March 18, 2020 on overnight recovery in the US markets, just few hours into trade post Supreme Court verdict on AGR dues, market sell-off aggravated and Nifty lost as much as 4.75% to 8537.35. This is because traders prefer safeguarding their capital in such volatile times.

Nifty Breaches 8500 Levels: Factors Responsible For Continuing Sell-Off

Nifty Bank has been dragged as much as 7%. This to an extent can be attributed to the fall-out of telecom sector to which banks have high exposure.

Here are the reasons what is spooking investor sentiment and the stock markets:

1. Coronavirus Cases In India Near 150:

There is no respite coming and the number of confirmed cases are only rising and now near close to 150. So, far there have been reported 3 deaths on account of the pandemic, one each in Karnataka, Delhi and Maharashtra. Also, 14 recoveries have been reported so far.

To prevent further spread of the infection, the government has taken several measures such as closure of malls, gyms, hospitality sector etc. and because of this there has been a severe hit on business as well as trade which has been taken highly negatively by the streets.

Globally as well as the cases have risen to more than 1.98 lakhs and 8000 fatalities have been reported from across the globe.

2. Supreme Court Order On AGR Dues Case:

The apex court slammed the DoT for the self-assessment by telecom companies on AGR (adjusted gross revenue) dues. SC further said that it was a matter of public money that has gone unpaid for 20 years and the telcos were trying to influence public opinion through the media. "We do not appreciate the actions of telecom companies, we will hold MDs personally accountable, the court said.

The verdict impacted the stocks like Vodafone Idea which fell over 30% in trade today and even the banking names such as IndusInd which is known to have a substantial exposure in debt-laden telecom companies.

3. FII Selling:

FII continues to sell in the Indian markets and in the current month have net sold stocks worth Rs. 38,188 crore as per the NSE data. This is primarily on the back of redemption in ETF by FIIs' clients due to adverse market conditions.

4. Global Markets:

As of writing this story, amid choppy trade all of the Asian indices were down between 1-5%, with Kospi down as much as 4.86%. European markets also opened with losses to the extent of 4.14% on FTSE.

Further, no commodity including safe havens has been spared on this rout as investors in order to cover losses in equities are selling off their positions in so called safe havens including gold. In today's trade, gold on MCX is down Rs. 800 at Rs. 39, 542 per 10 gm.

Meanwhile, rupee has pared all its morning gains and is down to 74.36 per US dollar.

For now, stock market experts advise no fresh bets in the capital markets as any minor rallies will get sold into. So, it shall be best to back off markets for now and wait till the dust settles.

GoodReturns.in