China infects global stock markets with bear virus


Photo credit twitter SL kanthan

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By S Jha

New Delhi, December 24: The Chinese Coronavirus avalanche has hit the world hard, bringing back the scare of 2020 when the global community explored the dark domain of viruses for clues to deal with the pandemic. Markets shudder at thoughts of disruptions, and predictably tanked at the scale of the pandemic in the Communist ruled China.

The Indian stock markets went in freefall on Friday, wiping out three months of gains in a flat three days. From the peak of 61835 seen on December 19, Sensex has come down to the level of 59900. That accounts for a net loss of 1935 points. Nifty in the same period has come down from the level of 18812 to 17806.

The peak of Dow Jones was 34589 on December November 30. The Nasdaq peak was at 11468 on the same day. Both the indices have since been battered, losing almost eight to 10 per cent. The Indian indices in contrast have lost not with similar intensity. Reason is simple. Domestic institutional investors (DIIs) bought into the Indian equities with over Rs 3300 crores of funds on Friday when the Dalal Street was bloodied in the bloodbath. The foreign institutional investors are not exactly dumping the Indian equities, as they sold only Rs 700 crores. The message is simple that the fund houses are seizing the opportunity to grab the equities at discount.

On Friday, Cipla and Divi’s Laboratory defied the bloodbath. Reports suggest that China is importing the Indian medicines in a big way to deal with the tsunami of Cobid-19 pandemic in all the Chinese provinces. Reports also suggest that the pandemic peak in China is still a few weeks away. With China reportedly running out of medicines and essential kits, the Indian pharma companies are witnessing a sudden spike in demand for its medicines, which may rub on their scrips favourably in the next few days.

The technical chartists are debating the bottom of the markets, which is one of the toughest jobs in the world. But they have a consensus that the market is sideways, making higher high, which is an indication of a long term bullish sentiments. With the stock markets tanking, scrips which had risen fast are being battered the most, and they are led by the whole pack of the Adani Group of Companies such as Adani Enterprises, Adani Ports, Adani Greens, etc. Metal pack is most bearish, as the shadow of pandemic may rub negatively on the demand for metals in the global economy. In a short term, the traders may heave a sigh of relief, for the Dow Jones closed in the green on Friday.

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