Stocks up, but see worst fall in 11 yrs

Indian stock markets ended nearly 4% higher on Tuesday, mirroring the confidence in global markets after Chinese manufacturing activity rose. The BSE Sensex ended at 29,468.49, up 1,028.17 points or 3.62%, while the 50-share index Nifty closed at 8,597.75, up 316.65 points or 3.82%.

Markets in other parts of Asia were mostly firm. China, Hong Kong and Korea edged higher, while Japan and Australia ended lower. China on Tuesday said its manufacturing PMI for March was at 52, indicating an expansion and defying expectations of a contraction. Analysts polled by Reuters had expected the figure to come in at 45 for the month. PMI readings below 50 point to a contraction, while figures above that level indicate an expansion.

According to Ajit Mishra, vice-president, research at Religare Broking Ltd, positive global cues, mainly in response to improvement in China’s manufacturing data, lifted investor sentiments, which led to buying in the Indian markets despite the rise in coronavirus cases. The India volatility index or VIX also fell 10.29% to end at 64.49 on Tuesday, which could indicate that probably there may be some respite in the sharp sell-off in Indian markets.

However, FY 2020 that ended on Tuesday saw the steepest market fall in 11 years. Benchmark indices Sensex and Nifty lost 23.8% and 26.03% respectively in FY20, worst since FY09. Markets slipped considerably towards the end of the fiscal, with benchmark indices falling over 20% in March alone as the number of covid-19 cases increased in India and a mandatory 21-day nationwide lockdown disrupted business.

For smaller stocks too, it was one of the worst years since FY09. In FY20, BSE Midcap index lost 31.72% and BSE Smallcap 36.06%.

Until the spread of covid-19 is curbed, market sentiment is likely to remain fragile, analysts said. According to analysts at Nomura, fears of an escalation, given the scenario in some European countries, have severely impacted market sentiment and hence, volatility is expected to remain high in the near term.

“In the near-term, in case the virus outlook in India improves, we expect a bounce-back in high-beta sectors such as financials that underperformed in the fall,” Nomura said.

For other asset classes too, it was a year of significant losses. The Indian rupee was down 8.46% in FY20 while Brent crude was down by a massive 66.42%. Foreign institutional investors bought Indian shares worth $390 million in FY20, lowest in four years. Domestic institutional investors, including mutual funds pumped in ₹1.25 lakh cr this fiscal, highest in at least 10 years.

(Ravindra Sonawane contributed to this story).