Why Indian companies are vulnerable during the pandemic
Owing to the pandemic, the Indian stock market has been plummeting for the past many weeks. After making several fresh highs in the month of January, Sensex currently stands at levels it attained in 2017. In the early days of March, several stocks took a nosedive bringing Sensex from 38300 as on 28th February to around 26000 on 23rd March. That’s a fall of over 30 per cent in a period of less than one month.
Moreover, the Indian stock market is yet to recover as it still stands at 30600 after the closing time on 16th April. The coronavirus outbreak has left the Indian companies vulnerable and given foreign buyers an opportunity to snatch up some of India’s biggest industry leaders. Australian companies were also facing a similar fate when a few days back, the Government of Australia tightened the foreign investment policy in order to protect companies against hostile international takeovers.
Indian stock market is among the worst hit in the world. The rupee has also slid to its record low of 76.80 against the US Dollar with the surging COVID-19 cases in the country. However, it is to be noted that several stocks have made a recovery in the past few days. After plummeting from over ₹1500 to below ₹900, Reliance is currently trading at ₹1170. HDFC Bank, which fell from levels of over ₹1200 to about ₹760, closed today at 884. Thus, there is a clear recovery in the Indian stocks. However, with the rising COVID-19 cases, it is difficult to say how long the Indian investor will maintain the sentiment.
What do you think is the future of the Indian stock market?