The Bombay Stock Exchange building in Mumbai. Photo: AFP
The Bombay Stock Exchange building in Mumbai. Photo: AFP

The ongoing bear grip over the Indian stock markets, due to the coronavirus-related economic slowdown and weak global cues, has been taking a heavy toll on retail investors. In this calendar year, they have reportedly lost about 3 trillion rupees (US$39.5 billion), according to a report.

Data from Capitaline at the end of December 31, 2019, said retail investors – those who have invested up to 200,000 rupees in an individual capacity – held 9.84 trillion rupees ($129 billion) worth of investments as stocks. The value had shrunk to 6.87 trillion ($90.3 billion) as on April 3, 2020. Only actively-traded stocks were considered for the analysis, the Business Standard reported.

Both the Bombay Stock Exchange index Sensex and the National Stock Exchange index Nifty have sunk more than 34% from their recent peaks in January. Stocks across the board – ranging from blue-chips such as Reliance Industries and HDFC Bank to low-price stocks have suffered heavy losses, with small investors getting their fingers burned.

March was the worst month as the Indian government imposed a 21-day countrywide lockdown to contain the spread of the coronavirus. Trains, buses and flights were stopped, factories, malls and cinemas were closed to prevent people gathering in large numbers. This has severely curtailed economic activity across the country. In addition, there are global fears of a recession.

More than 90% of the Nifty50 stocks hit a fresh 52-week low or multi-year lows in the same period. As many as 43 stocks on the Bombay Stock Exchange500 index fell more than 50% in March.

As many as 28 out of 30 index components in the S&P BSE Sensex gave negative returns in March, and 15 stock fell 24-70%. They include Tech Mahindra, HDFC Ltd, Titan Company, Bajaj Auto, SBI, Bajaj Finance, Axis Bank and IndusInd Bank.

Relentless selling by foreign investors in March shaved off more than 30 trillion rupees of investor wealth in a single month. Even those who had invested in mutual funds, considered a safer bet, saw their portfolios lose value every single day.

In March, foreign portfolio investors took away more than one trillion rupees ($13.36 billion). The depositories data showed that between March 2 and 27, foreign portfolio investors withdrew a net amount of 593 billion rupees ($7.92 billion) from equities and 528 billion rupees ($7 billion) from the debt segment.

This was the highest withdrawal since foreign investors’ data was made available on the National Securities Depository Ltd. For the past six months, foreign investors were the net buyers in Indian markets.

Market experts say foreign portfolio investors are now looking for safer investment options such as dollar-denominated asset classes and gold, as against investing in fixed income securities of emerging markets like India, which they consider to be vulnerable to economic shocks. They expect the situation to improve only if the current surge in coronavirus cases in the country tapers off.

Even before the coronavirus started to impact China and later other economies in the world, the Indian economy was facing a demand slowdown with rural areas facing rising unemployment and falling incomes. The current lockdown has further aggravated the crisis.

Meanwhile, a snap poll by industry body Confederation of Indian Industry on 200 chief executives across sectors found the majority of them fearing their revenues would fall more than 10% and profits dip by over 5% during the first six months of the current year 2020-21. Up to 80% claimed their inventories were lying idle, 52% foresee job losses in their respective sectors. All this will have an adverse impact the country’s Gross Domestic Product growth.