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Coronavirus: Will fear of spread grip stock market investors?

Updated : January 29, 2020 06:20 AM IST

The brokerage said the impact of similar epidemic in the past was very short-term.

From the recent history it was found that volatility in asset classes eventually subsides.

Chinese health scare induced sell-off has been sharp in oil futures.

As anxiety and fear grip the financial markets across the globe because of news of coronavirus spread, investors are making cautious bets in equities markets in India. How markets are going to react to the developments of virus spread in this week?

Brokerage YES Securities said the anxiety and fear in the financial markets because of virus spread in China and other parts of the world will be a short-lived affair, going by the past experiences.

The brokerage said the impact of similar epidemic in the past was very short-term, with the health-scare induced slowdown not persisting for more than 3-4 months.

From the recent history it was found that volatility in asset classes eventually subsides. As a case in point, Swine flu episode did create jitters though markets surmounted such concerns eventually.

Hitesh Jain, lead analyst at YES Securities, said: “It is inconceivable for funds, investors to shift, re-balance asset allocation strategy, primarily on epidemiological grounds.”

On Tuesday, the BSE Sensex ended 188.26 points or 0.46 percent lower at 40,966.86, while benchmark Nifty lost 0.48 percent to close at 12,055.80.

Chinese health scare induced sell-off has been sharp in oil futures. However, the brokerage said brent oil will eventually reclaim the familiar range of $59-64/bbl given the counter-balancing narrative of OPEC production cuts and rising US shale output.

According to a BBC report, the death-toll from coronavirus now stands at 106, with the number of infections almost doubling in a day to more than 4,500.

Coronavirus: Will fear of spread grip stock market investors?

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