Mumbai: World oil prices crashed Monday, fuelling a vicious selloff on stock markets which were already buckling under from the spreading coronavirus outbreak.
Stocks tanked as the global oil market nosedived 30 percent at one stage after top exporter Saudi Arabia slashed the prices it charges customers following a bust-up with Russia over crude production cuts.
Bloodbath on Dalal Street
In its biggest ever single-day drop in absolute terms, the BSE Sensex crashed over 1,941 points and the NSE Nifty tumbled 538 points as no let-up in coronavirus spread and massive crude oil plunge fuelled global recession fears. Besides, both indices also marked their biggest intra-day fall of all-time.
Benchmarks Sensex and Nifty slumped intra-day 2,467 points and 695 points, respectively. At the closing bell, the 30-share Sensex was down 1,941.67 points or 5.17 per cent at 35,634.95 — the lowest level in about 13 months. The broader Nifty settled at 10,451.45, dropping 538 points or 4.90 per cent.
The carnage in the equity market wiped out investor wealth worth Rs 6,84,277.65 crore, pulling the total m-cap of BSE-listed firms to Rs 1,37,46,946.76 crore on Monday.
On the Sensex chart, ONGC was the top loser, cracking over 16 per cent, followed by Reliance Industries, IndusInd Bank, Tata Steel, TCS, SBI, ICICI Bank and Bajaj Auto. Heavyweight Reliance Industries shed over 12 per cent. Shares of SBI plunged over 6 per cent after it said it will pick up a 49 per cent stake in Yes Bank for Rs 2,450 crore.
Crisis-hit Yes Bank, on the other hand, rallied over 31 per cent.
On the currency front, the Indian rupee weakened by another 27 paise to 74.14 per US dollar.
"Indian markets are facing a deluge of negative triggers. Global markets are plunging after the break of an alliance between OPEC and Russia resulted in the worst one-day crash in crude prices (more than 30%) in nearly 30 years, fuelling panic triggered by the escalation of the coronavirus epidemic," Deepak Jasani, Head Retail Research, HDFC Securities, said.
The Indian stock market will remain shut on Tuesday on account of 'Holi'. PTI ANS
Wall Street Woes
The dollar slid versus the yen, seen as a safe haven investment. New York stocks tumbled with the blue-chip DJIA index more than six percent, after trading had been halted for 15 minutes when losses hit seven percent shortly after the opening, triggering circuit breakers.
European stock markets slumped dramatically with London's FTSE index down more than seven percent at the close.
In Paris the CAC-40 index lost over eight percent, its worst daily drop since the 2008 financial crisis, while the Dax blue-chip index in Frankfurt saw its sharpest single fall since 2001.
"The markets have passed from panic mode into pure hysteria," said Ayush Ansal, chief investment officer at trading firm Crimson Black Capital.
"Markets were at breaking point before Saudi Arabia's decision to launch an oil price war but this latest development has taken them beyond that."
OPEC kingpin Saudi Arabia last week wanted Russia to join the cartel in deep production cuts after world oil prices slumped on forecasts of plunging demand because of COVID-19.
However, Moscow declined, triggering Riyadh's move to preserve market share and sideline its close competitor — thereby creating fresh market chaos.
"The war against the coronavirus is turning into a war for oil export markets," said analyst Tamas Varga at oil broker PVM Associates.
The dizzying oil drop — the steepest since the 1991 Gulf War — sent investors fleeing for safety alongside mounting fears over the worsening coronavirus, which has seen Italy lock down a swathe of its north.
"This will be remembered as Black Monday," said analyst Neil Wilson at trading site Markets.com.
Italy's stock market took the heaviest battering after a chunk of the county's northern region was sealed off -- including Milan and Venice -- as authorities struggled to contain the spread and impact of coronavirus.
At the end of an exceptionally volatile trading day, Milan's FTSE MIB index stood more than 11 percent lower.
As the disease claims more lives around the world, dealers are shedding riskier assets for safe haven investment, sending gold and the yen surging and pushing US Treasury yields to record lows.
While governments and central banks have unleashed, or are preparing to unleash, stimulus measures, the spread of COVID-19 is putting a huge strain on economies and stoking concerns of a worldwide recession.
Trading floors in Asia were also a sea of red, with Tokyo plunging more than five percent, Hong Kong more than four and Sydney by over seven percent.
Saudi equities also tanked, with oil titan Aramco's shares leading the plunge. The Dubai, Kuwait and Abu Dhabi exchanges also suffered sharp drops.
Energy Firms Hammered
Oil majors bore the brunt of a fierce wave of selling while other commodities firms also nursed heavy losses.
Hong Kong-listed CNOOC tumbled 17 percent and PetroChina more than nine percent, while in Tokyo, Inpex dived 13 percent. In Sydney, Santos plummeted 27 percent and Woodside Petroleum tanked 18.4 percent.
In London, BP shares saw heavy losses as did Shell, while French energy major Total also slumped.
Among miners, Anglo American and BHP Billiton were particularly badly hit.
Analysts meanwhile warned of further gyrations as the outbreak shows no sign of abating, with more than 110,000 people infected in scores of countries — including Italy, which is now the hardest-hit country outside China.