India’s equity market made a huge comeback in afternoon trading, after a sharp sell-off had triggered a trading halt in morning trading. Markets recovered much of the losses when markets re-opened and by the afternoon, the benchmark BSE Sensex was up over 1,000 points after the market regulator Securities and Exchange Board of India (Sebi) as well as the government stepped in to calm investors.
Reports that the cabinet had approved a rescue deal for Yes Bank also boosted market sentiments.
Over the last few days the Indian stock market has been moving in tandem with other global markets owing to concerns relating to COVID-19 pandemic, resultant fear of economic slowdown, recent fall in global crude oil prices, etc, Sebi noted. “Sebi and stock exchanges have a robust risk management framework in place, which automatically gets triggered in response to movements in indices (BSE Sensex, NSE Nifty) as well as individual stocks. Sebi and stock exchanges are prepared to take suitable actions as may be required,” it said.
Meanwhile, in Delhi, India’s chief economic adviser Krishnamurthy Subramanian told reporters the government and regulators would respond when it was necessary.
There has been a global rout in equity markets this week as investors dumped stocks in the fear of the rapid spread of coronavirus, which threatens global supply chains, travel and tourism. On Thursday, the Wall Street had its worst day since 1987, with key indices like the Dow Jones Industrial Average declining 10 per cent.
Shares of hotel chains, travel companies and airlines have taken a huge hit across major markets.
In India, the Sensex and Nifty plunged 10 per cent in morning trading triggering a circuit breaker and markets closed for 45 minutes. The cool-off seemed to have calmed investors. In the afternoon trading, the Sensex was up 4.6 per cent or 1,493 points at 34,271.54 points. The wider NSE Nifty50 index was at 10,013.55, up 423 points or 4.4 per cent.
Troubles at private sector lender Yes Bank, and its likely contagion effect on the wider financial sector had also dented investor sentiments.
TV reports on Friday suggested that the Union cabinet has cleared a draft resolution scheme for the capital starved lender. State Bank of India, the country’s largest lender, announced on Thursday evening that it would infuse Rs 7,250 crore into Yes Bank, picking up 725 crore shares at Rs 10 each. Its shareholding in Yes Bank is expected to remain within 49 per cent as envisaged in the draft reconstruction scheme.
According to a report, several other private banks and investors will also join SBI to pump in money to save Yes Bank, which was trading at Rs 26.40, up 5 per cent on the BSE. SBI was also up 14.4 per cent at Rs 243.40.
Telecom stocks Vodafone Idea and Airtel also rose on Friday afternoon on hopes that the cabinet had also approved a relief package for the sector. The top brass of Vodafone Idea has warned in the past that the company may have to shut shop if there was no relief from the government.
Following the Supreme Court ruling in favour of the government in relation to adjusted gross revenue (AGR), telecom companies are staring at a payment of over Rs 1 lakh crore in dues. Bharti Airtel shares traded up over 7 per cent at Rs 497.60 and Vodafone Idea was 28 per cent at Rs 5.38 on the BSE.
