Indian stocks rebounded in a volatile session, following a record fall on March 23 triggered by a nationwide lockdown.
The S&P BSE Sensex Index closed up 2.7% at 26,674.03, after advancing as much as 5.7%, with the NSE Nifty 50 Index rising 2.5% for the day. Finance minister Nirmala Sitharaman’s speech in the last hour of trading failed to excite investors due to a lack of relief measures for the economy amid the pandemic. Investors turned their attention to the prime minister’s speech on Tuesday, as Narendra Modi ordered lockdown of country of 1.3 billion people for 21 days.
Swings on India’s benchmark stock gauge spiked to a record high on Tuesday, with Sensex’s 10-day realised volatility hitting a record 106%. Average trading volumes for the Sensex were about 46% more than the 30-day average at the close.
PM Modi and state leaders over the weekend imposed an almost complete lockdown, which will probably worsen an economy already growing at its slowest pace in more than a decade. India has more than 500 virus cases, including 10 deaths. But experts say the country could be on the same trajectory as Italy, where the outbreak quickly escalated, causing hospitals to overflow.
Oxford Economics has slashed India’s growth forecast for January to April to 3%, a number not seen even during the worst of the global financial crisis, even as the government weighs the possibility of a fiscal stimulus to support the economy. Meanwhile, the central bank last week announced measures to boost liquidity while holding back from following global peers with a rate cut.
In an effort to support the domestic market, the Securities and Exchange Board of India has lowered the compliance burden on market participants, including extending risk management framework deadlines for mutual funds. The regulator last week raised margin requirements and capped derivatives exposure for a month in a bid to subdue market volatility.
Foreign investors have sold $6.7 billion worth of Indian equities in March, on track for a record monthly withdrawal, according to data compiled by Bloomberg dating back to 1999.
“It’s a great time to pick up bargains in markets like India,” Mark Mobius, co-founder and partner at Mobius Capital Partners LLP, said in an interview with Bloomberg Television.