Indian Stock Markets Continue To Collapse; Nifty Hits 10% Lower Circuit

Asian stock markets are lower today as panic gripping world financial markets deepened. The Shanghai Composite is off 2.4% while the Hang Seng is down 4.9%. The Nikkei 225 is trading down by 8%. Meanwhile, trade was halted on the S&P 500 after it hit downdraft circuit breakers. It fell further when trade resumed, eventually losing 9.5% to close 27% below February's peak.

Back home, India's share markets plunged again in the opening session. The BSE Sensex is trading down by 2,842 points while the NSE Nifty is trading down by 966 points. The BSE Mid Cap index opened down by 3.9%, while BSE Small Cap index opened down by 2.9%.

All sectoral indices are trading down with metal stocks and IT stocks witnessing maximum selling pressure.

Note that yesterday was the biggest ever fall for the Sensex in absolute terms in last two decades... And the second biggest fall for the Smallcap index.

Moving on, the rupee is currently trading at 74.41 against the US$.

The rupee slid by 56 paise to a fresh 17-month low of 74.24 against the US currency on Thursday due to strong dollar demand as investors pruned riskier bets amid coronavirus pandemic fanning recession fears.

Indian equity markets suffering their worst single-day losses and stock indices slipping into bear territory also hit the rupee sentiment.

At the interbank foreign exchange market, the rupee was trading down by 56 paise at 74.24 in the closing session.

The local unit opened lower at 74.25 against the last close of 73.68 and fell further by 82 paise to 74.50 after the World Health Organization declared the new coronavirus (COVID-19) a pandemic.

Moving on to the news from banking sector. According to the latest Reserve Bank data, banks credit grew at 6.1% to Rs 101 trillion while deposits expanded by 9% to Rs 133.3 trillion in the fortnight to February 28.

In the year-ago fortnight ended March 2019, banks' advances were at Rs 95.2 trillion while deposits stood at Rs 122.3 trillion.

In the previous fortnight which ended on 14 February 2020, bank credit had grown by 6.4% to Rs 100.4 trillion, while deposits rose by 9.2% to Rs 132.4 trillion.

In January 2020, bank credit growth declined to 8.5% as against a growth of 13.5% year-ago, led by a sharp slowdown in loans to the services sector.

Note that, if there is one sector that has been under fire for most since 2018, it is financial services.

Since the IL&FS crisis, the domino effect has affected all lenders in the Indian economy.

NBFCs have struggled after the IL&FS crisis and are wary to lend.

There has been a silver lining in this mess. i.e. the increased market share of private sector banks. This is evident in the chart below:

India's Credit Shift Megatrend