Indian shares erased early gains to sink lower on Wednesday, with heavy losses in financial stocks, as fears of the economic damage from the coronavirus pandemic eclipsed hopes of stimulus to buttress the world economy.
The NSE Nifty 50 index gave up early gains and slid 2.8% to 8,714.25, while the benchmark S&P BSE Sensex dropped 2.86% to 29,705.
“There is no positive news, there is no clarity about the impact of the virus, until there is data-backed positive news a rally won’t sustain itself,” said Neeraj Dewan, director at Quantum Securities.
Indian equities, which rebounded from a steep fall on Friday on hopes of coordinated stimulus measures to combat the impact of the virus, have been kept in check this week mostly by losses in financial stocks.
On Tuesday, India closed the Taj Mahal, its principal tourist site, and the financial hub of Mumbai ordered offices providing non-essential services to keep half their staff at home to curb the spread of the virus. On Wednesday, the number of cases in India rose to 130.
In India, the blow from the virus outbreak comes amid a general slowdown in consumption that has hit demand for everything from cars to clothes to chocolates.
“Before, there were signs of bottoming and we were on the verge of reversing that, now again we have taken a hit,” Dewan added.
U.S. stock futures and several Asian shares fell in choppy trade, with MSCI’s broadest index of Asia-Pacific shares outside Japan dipping 0.1%, even after a bounce on Wall Street following Monday’s historic selloff.
Gains across markets were capped by fears over the spread of the coronavirus, which has disrupted global business and rattled financial markets.
The Trump administration pressed on Tuesday for enactment of a $1 trillion stimulus package as deaths from the virus outbreak in the United States crossed 100.
On the blue-chip Nifty 50 index, Kotak Mahindra Bank and Axis Bank were top losers, both slipping nearly 5%.
The Nifty bank index fell over 5% with shares of Federal Bank inching over 10% lower.
The Nifty PSU index slipped over 3% with shares of top lender State Bank of India leading losses.
Auto stocks remained under pressure with the Nifty auto index slipping nearly 3%.
The rupee, which fell to a record low of 74.508 against the dollar last week, was a tick stronger at 74.1950 by 0620 GMT.
Among the gainers on the Nifty 50 index, Yes Bank Ltd surged nearly 50% while shares of Zee Entertainment climbed 11%.