Market bleeds 2,700 points; SBI Cards listing bombs

The bears were in charge on Dalal Street as the market continued to trade with deep cuts in the red amid the rapid spread of the coronavirus pandemic. The S&P BSE Sensex crashed nearly 8% (2,713 points) to end the trading session at a 30-month low of 31,390 points on Monday.

Market selloff intensifies

Investors lost close to ₹7.5 lakh crore in Monday’s trade. Top losers include IndusInd Bank that saw heavy selling with the stock price falling 17.5% to ₹633 per share, while Axis Bank and ICICI Bank were down nearly 10%.

The mood of gloom was echoed in the broader market. The S&P BSE MidCap index lost 6% to end at 11,889 points and the BSE SmallCap index declined by 5.6% to 11,095 points. The volatility index soared 16% to 59.74 on Monday.

Market experts expect the current volatility to continue. Ajit Mishra, VP, research, Religare Broking, says, “The markets are showing no sign of stability as the economic impact of the coronavirus is likely to be significant for many major economies. Even after U.S. Fed’s slashing of interest rates to a range of 0% to 0.25% and the introduction of a $700 billion stimulus programme, investor sentiment remains weak.”

Rusmik Oza, senior VP, head of fundamental research-PCG at Kotak Securities, recommends investors to focus on large caps at this juncture. “Due to fear factor markets have the tendency to react too much too soon and in this process create panic bottoms which in hindsight after some months and years look like it was a good buying opportunity then,” Oza adds.

SBI Cards listing

The much-awaited SBI Cards IPO saw a tepid response from investors amid widespread fears of a deep economic impact of the coronavirus. The shares listed on the BSE at a discount of 12.8% at ₹658 per share, and closed the trading session 3.8% higher at ₹683.20 per share. The shares were issued at a price of ₹755 a piece.

The listing of the credit card arm of the country’s largest public lender, SBI, collapsed amid the frenzied selloff across global markets. The ₹10,000 crore IPO of the second-largest domestic credit card issuer, drew bids for 225 crore shares versus the 10 crore shares on offer. It was subscribed over 22 times. The QIB category was subscribed 57.18 times and the retail category over 2 times.

SBI divested 4% of its 74% holding, and Carlyle Group sold a 10% stake in SBI Cards as part of the IPO sale. Lead managers to the issue include Kotak Mahindra Capital, Axis Capital, DSP Merrill Lynch, HSBC Securities, SBI Capital Markets, and Nomura Financial.