Indian stock markets are under pressure for the fourth straight day, tracking a rout in global equities. The Sensex fell nearly 400 points today, breaching 40,000 level. The Sensex has shed over 1,400 points in this four-day selloff, which has wiped out about ₹5 lakh crore of investor wealth. Most Asian markets were lower today after heavy selling on Wall Street overnight. The broader Nifty today fell to 11,679 at day’s low.

Though fresh cases of coronavirus have been declining in China, a spurt in cases in many countries outside China has pushed investors into safe haven assets like gold and US government bonds.

“Comments by a CDC (Centre for Disease Control) official that the US should prepare for the coronavirus outbreak becoming a pandemic has further dampened global risk sentiment,” forex advisory IFA Global said in a note.

Investors are growing increasingly fearful about the impact of coronavirus on the global economy. The death toll is now at more than 2,700 while those infected are approaching 80,000 though new cases in China, the epicentre, are falling.

Foreign institutional investors continued to be sellers for a second day in Indian markets, selling shares worth ₹2,315.07 crore on 25 February, according to provisional data.

“We are worried that the impact of coronavirus on India could happen with a lag. The outbreak is now expected to cause a growth erosion of 100 bps in China alone. New hotspots have emerged in South Korea and in Italy and these will result in more quarantines, border closures and disruptions in economic relations,” Soumya Kanti Ghosh, group chief economic adviser at SBI, said in a note.

“The cost of death even though might be limited, the economic impact could be significantly large,” he cautioned.

Analysts have turned cautious on markets. “Best case scenario sees 11560/500 as a turnaround point and worst case scenario sees 11000, with limited intermediate support seen at 11,684,” analysts at Geojit BNP Paribas Financial Services said in a note.

The government will announce GDP data for the December quarter later this week. “Our composite leading indicator (index of 33 major leading indicators) suggests that GDP growth will remain flat at 4.5% as in Q3 of FY20,” Soumya Kanti Ghosh of SBI said in a note. (With Agency Inputs)

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