Force majeure takes over Dalal Street, Sensex gasps for air

It was manic Monday as the stock market bears ran riot with coronavirus cases rising in India and abroad, taking lives and forcing businesses to shut down. Along with that a ceaseless dumping of stocks by the foreign investors is also weighing on investor sentiments.BSE flagship Sensex dived over 1000 points to below 28,800. NSE barometer Nifty fell about 300 points to 8,376. Here are the top factors dragging D-Street lower:Coronavirus crisis deepensTotal cases of coronavirus in India surged above 1,100 increasing the worries of community contagion, which would lead to an exponential growth in the number of patients. As per government data, there were 942 active cases while 20 patients succumbed to Covid and 99 have been discharged from the hospitals. World over, the number of cases has climbed to 7,13,740 as per a tally by John Hopkins University. The US is most affected with a number of cases above 1,43,000. Italy has recorded the most deaths at 10,779.'Act of God’? With sales virtually coming to standstill, companies have started evoking ‘act of god’ clauses and delaying payments to their vendors. Investors fear with time, more companies may default or delay payments. Hero MotoCorp invoked force majeure to suspend full payments to vendors, since it has “no visibility of receivables,” with sales having come to a standstill because of the Covid-19 lockdown.Force majeure means unforeseeable circumstances that prevent someone from fulfilling a contract. Recession likelyVarious research agencies have sounded the bugle of a flat growth if lockdown is extended. India's gross domestic product (GDP) is likely to contract by 4.5 per cent in the April-June 2020 quarter and will rise by only 2 per cent in 2020-21 on the coronavirus impact, according to domestic rating agency Icra.Even RBI Governor Shaktikanta Das said the GDP growth projection of 4.7 per cent in January-March quarter, which was necessary for India to achieve a 5 per cent growth rate in full 2019-20 fiscal, is "now at risk from the pandemic's impact on the economy". Moody's Investors Service on Friday slashed its estimate of India's GDP growth during the 2020 calendar year to 2.5 per cent from an earlier estimate of 5.3 per cent.More to come...

from Economic Times https://ift.tt/3byoGsA