A Study to Comprehend Nifty50 Index of India during Covid 19 Pandemic Epoch
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Studies in Indian Place Names
(UGC CARE Journal) ISSN: 2394-3114
Vol-40-Issue-68-March-2020
A Study to Comprehend Nifty50 Index of India during Covid 19
Pandemic Epoch
Aishwarya Katare
Amity University, Mumbai, Amity Business School
Dr. A.K.S. Suryavanshi
Director, Amity Business School, Amity University, Mumbai
Dr. Pushpendu P. Rakshit
Amity Business School, Amity University, Mumbai
ABSTRACT
This study is about the impact of COVID 19 on Indian stock exchange and stands to be a real time study
during this economic turbulent time. There are two significant indices in India. The S&P BSE Sensex
represents the Bombay stock trade and CNX Nifty represent the National Stock Exchange. CNX Nifty
consists of the largest and most frequently traded stocks within the National Stock Exchange. It is
maintained by India Index Services & Products Limited (IISL) which is a joint venture of National
Stock Exchange and CRISIL. In fact, the term CNX stands for CRISIL and NSE. To analyze Nifty50
index movement few variables are examined i.e technical indicators, DOW futures, daily news both
national and international, FII and DII activities, SGX Nifty etc. This analysis is limited for just 1-
month expiry from 28th Feb 2020 to 27th March 2020. Analysis was carried out on the carts of Nifty
from Zerodha application with few indicators like RSI; Bollinger Band; Volume; 20,50,100,200 Days
Moving averages, MACD. FII DII data is taken from official website of NSE and SGX Nifty, DOW,
DOW Futures, Nasdaq value from Money Control. This study attempts to examine the Nifty movement
at the time when market all over the globe have corrected by more than 20% which has pushed almost
all the indices in the World into the bear market territory. As on 23rd March 2020, Nifty has shown a
correction of almost 38.8% from its recent high. There are various sectors which has affected global
market because of this Covid-19 pandemic are aviation, hospitality/ tourism, oil and gas, automotive,
consumer products, consumer electronics and semiconductors. If we talk just about the Indian market
then major sectors affected because of the virus are Metals, Banks & NBFC’s, Automobile, Aviation,
Supply chain etc. This study is a based on real time data from 28 th Feb 2020 to 27th March 2020 and
would help to understand fluctuations in stock markets.
Keywords: Nifty50 index, stock market, COVID 19 pandemic, economic turbulence.
INTRODUCTION
There are two significant indices in India. The S&P BSE Sensex represents the Bombay stock trade and
CNX Nifty represent the National Stock Exchange. CNX Nifty consists of most frequently traded
stocks within the National Stock Exchange. NSE Indices Limited (some time ago known as India Index
Services and Products Limited), or NSE Indices, possesses and deals with an portfolio of 67 indices
under NIFTY brand as of September 30, 2016, including NIFTY 50. Nifty indices were likewise
accessible for trading on four international stock exchanges as of November 30, 2016, pursuant to
cross-listing arrangements and permit concurrences with the Singapore Exchange, the Chicago
Mercantile Exchange, the Taiwan Futures Exchange and the Osaka Securities Exchange. India Index
Services & Products Limited (IISL) is a joint venture of National Stock Exchange and CRISIL. CNX
word came from merger of CRISIL and NSE.Nifty is possessed and overseen by India Index Services
and Products (IISL), which is an entirely claimed subsidiary of the NSE Strategic Investment
Corporation Limited. The Nifty 50 was propelled 1 April 1996, and is one of the many stock records of
Nifty. Full form of NIFTY is National Index Fifty. It is weighted average of 50 Indian organization
stocks in 13 segments and each organization has specific weightage towards development of NIFTY
Index. Nifty50 Index is determined utilizing free float market capitalization method. Nifty50 can be
utilized for various purposes, for example, benchmarking reserve portfolios, propelling of record assets,
ETFs and organized items.
Page | 335 Copyright ⓒ 2020 Authors
Studies in Indian Place Names
(UGC CARE Journal) ISSN: 2394-3114
Vol-40-Issue-68-March-2020
Following data represents the sectors and their respective weightages towards Nifty50 Index
Sectors Weight (%)
Financial Services 41.89
ENERGY 13.64
IT 13.28
Consumer Goods 11.93
Automobile 5.13
Construction 3.17
Telecom 2.92
Metals 2.77
Pharma 2.08
Cement & Cement Products 1.61
Fertilizers & Pesticides 0.62
Services 0.57
Media & Entertainment 0.39
Source: NSE (1st March 2020)
Top constituents by weightage:
Company's Name Weight (% )
HDFC Bank Ltd. 11.00
Reliance Industries 9.28
Housing Development Finance Corporation 8.11
ICICI Bank Ltd. 6.95
Infosys Ltd. 5.59
Kotak Mahindra Bank Ltd. 4.68
Tata Consultancy Services Ltd. 4.54
ITC Ltd 3.72
Hindustan Unilever Ltd. 3.36
Axis Bank Ktd 3.35
Source: NSE (1st March 2020)
OBJECTIVES
GENERAL
Objective of the research was to analyze the Nifty50 index. Analysis was done on the basis factors like:
Dow Futures, Major Events in US, Technical indicators, Events in domestic market, USD/INR
movement, BRENT, Corona cases etc
SPECIFIC
Given below was the list of objectives which was expected to analyze while analyzing the Nifty50
Index
- To analyze how market reacts after the circuit break happens on the basis of the previous circuit
breaker in past along with Dow futures and USD/INR movement.
- To analyze FII/ DII data to understand how much FII are buying or selling in market.
- In Understanding how market reacts to major events and press conference or financial aid given by
government.
Page | 336 Copyright ⓒ 2020 Authors
Studies in Indian Place Names
(UGC CARE Journal) ISSN: 2394-3114
Vol-40-Issue-68-March-2020
METHODOLOGY
Methodology adopted for the research was based on secondary data. A secondary source provides
second hand information that has been digested, analyzed or interpreted. Secondary sources are often
written well after the events that reported on and can put past information into historical context.
Secondary data sources for this research was:
Regulatory measures taken by SEBI in view of ongoing market volatility (SEBI Press Release 20
Mar 2020)
SEBI’s decisions to reduce compliance burden on Market Participants (SEBI Press Release 23 Mar
2020)
SEBI relaxes compliance of certain provisions of SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 due to the CoVID -19 virus pandemic (SEBI Press Release 19
Mar 2020.
SEBI statement on market movement (SEBI Press Release 13 Mar 2020)
Fed Press Release along with Wall Street Journal
Historical Nifty index data from NSE website
FII/DII data from NSE website
Option Chain for Nifty50 Index
1. NIFTY50 5TH MARCH 2020 EXPIRY
Under the situation of corona virus, many countries are impacted. So we thought of analyzing the Nifty
index during such a situation where not just India but other countries are equally impacted. India has
already started showing the impact of Covid-19 in last week of Feb itself. As on 28th Feb 2020, i.e the
first day Nifty50 open at level of 11,386 with a gap down of -248 points and closes at 11,201.Nifty50 as
on 28th Feb is below 50, 100, 200 days moving average for 1-day candle.
If we will see the weekly charts of Nifty50 given below (Fig 4.1.1) 11,266 is important support level for
Nifty as it is 100 days moving average, if Nifty breaks this level which a large volume then Nifty is
expected to go more down and second level of support which comes out to be 10,300 which is 200 dma
on weekly candle of Nifty.
Fig 4.1.1: Nifty50 weekly candle
Source: Zerodha
In 1 week of expiry, Nifty was trading in a range of 11,000 – 11,450.
st
On 5th March 2020, there was a big news about SBI and Yes bank merger. After market hours there was
a news break that central government has imposed a moratorium on Yes Bank, restricting the
withdrawal of deposits to Rs 50000. Any withdrawal over the amount will require the permission of the
Reserve Bank of India. This had a negative impact on the sentiments on the domestic market. So that
day nifty closed at the level of 11,272.
Page | 337 Copyright ⓒ 2020 Authors
Studies in Indian Place Names
(UGC CARE Journal) ISSN: 2394-3114
Vol-40-Issue-68-March-2020
2. NIFTY50 12TH MARCH 2020 EXPIRY
On 6th March 2020, morning SGX Nifty was down by almost -400 points. Nifty open at 10,942, Nifty
index has already crossed 100 dma on weekly chart of the Nifty50 with a gap down by -327 points and
close at 10,989.The major reason for gap down opening was because central government has imposed a
moratorium on Yes Bank, restricting the withdrawal of deposits to Rs 50000 which had very negative
impact on sentiments of people and other reason was Dow futures were also down by approx. down by
approx. -400 points.
After observing the weekly chart of Nifty (Fig 4.2.1)10,300 is a very good support which is 200 dma
and market can take a bounce from it
Fig 4.2.1: Nifty50 weekly candle
Source: Zerodha
Over the weekend, news came about disagreement in OPEC meeting between Russia and Saudi Arabian
Oil Co., oil prices collapse after Saudi pledge to boost output. BRENT reached around 35 USD/ Barrel.
Saudi Arabian Oil Co. decided to boost production to 12.3 million barrels a day in April. Saudi Arabian
oil giant Aramco slashed prices and promised to increased output, this again affected the sentiments of
the global market in negative way.
On 9th March 2020, at morning SGX Nifty was again down by almost -250 points and DOW futures
were down by -1250 point. Nifty open at 10,742 with a gap down of -247 points during that intraday
session Nifty touched the support i.e which is 200 dma on weekly candle of Nifty and took a bounce
from the support and closes at 10,451.
In the event that the crude oil costs keep on staying low, India could see its general import charge
descend. For each drop of a dollar in crude price, India's import charge descends by nearly Rs 3,000
crore. Even though low oil prices is good for Indian economy but there was no constructive outcome or
positive impact was seen in Indian stock market.
On 9th March 2020, Dow was down by -2013 points, their market was haulted for 15 mins and resumed
at 9:49 am ET, this happened in their market back in 1997. Circuit Breaker Halts Stock Trading for
First Time Since 1997 Stock trading halted for 15 minutes after S&P 500 falls 7%.(Source : Wallstreet
Journal https://www.wsj.com/articles/traders-closely-watching-circuit-breakers-thresholds-
11583761223)
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Studies in Indian Place Names
(UGC CARE Journal) ISSN: 2394-3114
Vol-40-Issue-68-March-2020
Note: 10 March 2020 is holiday for our Indian Market.
Fig 4.2.2: Dow Jones Daily candle
Source: Investing.com
th
On 10 Dow was up by +557 points as Trump proposed to suspend payroll tax. (Source :
https://www.wsj.com/articles/white-house-intensifies-push-for-coronavirus-stimulus-measures-
11583851800)
On 11th March afternoon ET Trump Speech on travel restriction fuel sell off in US market
(Source:https://www.wsj.com/articles/global-stocks-follow-u-s-markets-lower-11583975524) Dow was
down by -1464.94 and closed at 23,553.22 and WHO declared Corona as pandemic which increased
the fear in overall market.(Source: https://www.wsj.com/articles/u-s-coronavirus-cases-top-1-000-
11583917794 )
Fig 4.2.3: Dow Jones weekly candle
Source: Investing.com
Above chart (Fig 4.2.3) is weekly chart for Dow, the blue line shown is the 200 dma on weekly chart
(Major support) if market breaks this level then major sell off will be observed.
On 11th March, Nifty open at 10,334 with a gap down by -117 point and closed at 10,458.
On 12th morning SGX nifty was around -400 points down and market open at 10,039 with a gap down
of -419 points breaking the major support which was 10,300 (200 dma on weekly chart) and close at
9,590. Now after breaking this level Nifty is expected to go down more.
Page | 339 Copyright ⓒ 2020 Authors
Studies in Indian Place Names
(UGC CARE Journal) ISSN: 2394-3114
Vol-40-Issue-68-March-2020
3. NIFTY50 19TH MARCH 2020 EXPIRY
Stocks Plunge 10% in Dow’s Worst Day Since 1987 Benchmarks slide as S&P, Nasdaq join Dow in
bear-market territory. As we have seen in charts (Fig 4.2.1) that for Dow 23618 was a big support but
on 12th March Dow opened at 22207 with a gap down of -1348 points and on same day it was down by
-1464.94 point (-5.86%) which has created terror in overall market across the world. The panic selling
pushed Dow index into a bear – market territory and triggering a 15 mins hault in trading shortly after
market opens. The Dow industrial shed 2352.6 points, or 10% to 21200.62. The S&P 500 sank 260.74
points or 9.5% to 2,480.64. And the Nasdaq Composite slid 750.25 points, 0r 9.4% to 7201.80.
(Source: https://www.wsj.com/articles/global-stocks-follow-u-s-markets-lower-11583975524)
CIRCUIT BREAK CRITERIA
The index-based market-wide circuit breaker system applies at 3 phases of the index movement, either
way viz. at 10%, 15% and 20%. These circuit breakers when triggered, trading gets halted in all equity
and equity derivative markets countrywide. The market-wide circuit breakers are triggered by
movement of either the Sensex or the Nifty 50, whichever is breached prior. Exchange has issued a
circular no 85/2013 (Download No-24709) dated October 11, 2013.
The market shall re-open, after circuit filter breach, with a pre-open call auction session. The extent of
duration of the market halt and pre-open session is as given below (Fig 4.3.1):
Fig 4.3.1: Market halt and Pre-Open session
Source: NSE
th
On 13 March 2020 morning around 7 am SGX Nifty was down by -600 point, DOW Futures was also
down by -565 point. In pre trading session Nifty Index was opening at gap down by -400 point at
around 9,107, all the news channel was covering news about Indian circuit break parameters which
made it quite obvious that today i.e 13 March we have high probability that we will break the circuit.
Trading had to be halted in Indian markets for 45 minutes after Nifty50 index crashed 10% in early
trade. The NSE Nifty50 hit its lower circuit at 8,624.05, down 966.10 points or -10.07 per cent. The
BSE Sensex also hit its 10 per cent lower circuit limit at 29,687.52 after falling 3,090.62 points, or 9.43
per cent. The trading has been halted for 45 minutes.The pre-open took place at 10.05 am. The trading
was resumed at 10.20 am.The Indian rupee on that day also hit a record low of 74.50 against the US
dollar. Not only India, markets in Indonesia and Thailand, South Korea and Philippines also hit their
lower circuit limits. Fear gauge VIX stood at around 50 and moved up to 58, following graph shows the
Page | 340 Copyright ⓒ 2020 Authors
Studies in Indian Place Names
(UGC CARE Journal) ISSN: 2394-3114
Vol-40-Issue-68-March-2020
India VIX movement throughout the day with 2 mins candle. In history of Indian stock market 13 th
March 2020 will be a very important date after 21 and 22 Jan 2008 where we have seen the circuit
break which has resulted the market to halt for 45 mins.
Fig 4.3.2: India VIX on 13th March 2020 with 2 mins candle
Source: Zerodha
Coming back on 13 March 2020, market pre-open session stared at 10:05 am, in pre open session Nifty
50 was down by approx. -10.79% at level of around 8,555 and market opened again at 10:20 am and
during that time DOW futures were showing recovery of +800 points from lower levels, and Dow
futures at around 10:16 am IST was at around 21,239 up by +154 points and US/Rupees is also showing
recovery from lower levels at 10:17 am its around USD/INR 74.09 up by +0.16 (0.22%) and Finance
minister said that they are continuously monitoring the market. So Nifty moved up and closed at
9955.20. Nifty highest level is 12444 and market has exactly closed at 20% low from the top. (20 % of
12,444 = 2,488.8 & 12,444 – 2,488.8 = 9,955.2)
Table: Recovery from Circuit level
Date Circuit level Closing level Recovery from Circuit level
21 Jan 2008 5134.7 5208.8 1.5 %
22 Jan 2008 4687.9 4899.3 4.5 %
17 Oct 2007 5107.7 5559.3 9%
22 May 2006 2922.2 3081.35 5.5 %
17 May 2004 1524.5 1388.75 - 15 %
Source: Google
As per the previous circuit break that after circuit break market on intraday bases recover from its lower
levels. (Latha S Chari, Pradiptarathi Panda, and Sunder Ram Korivi; 2017-18)
If we have already seen that Nifty broke the 200 dma on weekly chart of Nifty which was 10,300. So
now if we observe the monthly chart (Fig 4.3.3) then next strong support come out to be 8,445 (Purple
line) which is 100 dma in monthly candle.
Page | 341 Copyright ⓒ 2020 Authors
Studies in Indian Place Names
(UGC CARE Journal) ISSN: 2394-3114
Vol-40-Issue-68-March-2020
Fig 4.3.3: Nifty Monthly Candle
Source: Zerodha
After market hours on 13th March 2020, there was a press conference by Union Minister Prakash
Javadekar and Finance Minister Nirmala Sitharaman important highlights of press conference:
Cabinet has approved reconstruction scheme for Yes Bank as proposed by RBI. SBI will have a
lock-in period of three years for 26 per cent for shares. Private investors are also being brought in.
They will also have a lock-in period of three years, but it will be for 75 per cent of investment they
bring
Remission of Duties and Taxes on Exported Products scheme approved by Cabinet
Global markets had severe volatility and government is consciously monitoring them
The Fed said it would buy an additional $33 billion of bonds to address poorly functioning markets. It
was a welcome move for a large quantitative trading firm in midtown New York, where the freezing up
of the Treasury market had rattled traders all week. (Source : https://www.wsj.com/articles/diary-of-a-
crazy-week-in-the-markets-11584143715)
At around 7 PM IST on 13 March 2020 Dow Futures was showing + 1250 points up and on same day
Dow was up by +1985 (+9.36%) and Dow close around 23,185.62. The stock market opened sharply
higher.
Over the weekend, Federal Reserve cut its benchmark interest rate to near zero and would buy $700
billion in Treasury and mortgage-backed securities but with increase in corona affected cases this rate
cut has resulted in negative impact on Dow futures. ( Source: https://www.wsj.com/articles/fed-takes-
emergency-steps-as-virus-pushes-economy-toward-recession-11584310776)
On 16th March 2020 at 7 am Dow futures were down by -1045 points i.e 21,794 and SGX at around 8
am, was down by -380 points. Nifty open at 9586 with a gap of -408 points and closed at 9197.40 down
by (-7.61%).
On 17th Morning, Dow futures were up by approx +650 points and SGX nifty was up by +250 points at
around 8 am, and Nifty open with a gap of +80 points at and closed at 8967 (-2.50 %).
On 18th morning around 8 am, Dow Futures were down by -833 point and indicated that they are ready
for circuit break, SGX nifty was up by +41 points and Nifty open at 9086 with a gap up of + 122 points
but market went down as Dow was showing circuit break and Nifty closed at 8468 (-5.56%) Next
important level for Nifty is 8445 as it is 100 dma on month candle which we already seen in Fig 4.3.7.
If Nifty goes below this level then it will go more down and then support will be at 8000.
On 19th March, SGX Nifty was down by approx. -450 points and Nifty open at 8065 with a gap down of
-475 points, and Nifty closed at 8263. It’s been observed that on 19 th March 2020 Nifty closed at 8,263
breaking the important support of 8,445 i.e 100 dma on month candle which we already seen in Fig
4.3.3.
Page | 342 Copyright ⓒ 2020 AuthorsStudies in Indian Place Names
(UGC CARE Journal) ISSN: 2394-3114
Vol-40-Issue-68-March-2020
4. NIFTY50 26TH MARCH 2020 EXPIRY
th
On 20 March 2020, in morning at 8 am SGX Nifty was up by +79 points, Nifty open at 8,313 with a
gap up of +46 points, there was a great volatility in nifty, it went down till 8,182 and recovered from
lower levels and moved up to 8,876 and it closed at 8745.45(+5.83%) as Dow futures were up by +788
points.
Over the weekend SEBI announced regulatory measures for ongoing volatility this was effective from
23th March for a period of 1 Month. Major point are as follows:
(Source:https://www.sebi.gov.in/media/press-releases/mar-2020/regulatory-measures-taken-by-sebi-in-
view-of-ongoing-market-volatility_46389.html)
For stocks in F&O segment, Market Wide Position Level may be Revised to 50% previously it use
to be 95% then only that stock would be ban but now even if it reaches 50% then its banned
because of that 9 F&O stocks are banned.
In cash Market share from 30 March you have to keep 40% margin then only you can buy or sell.
Short positions in index derivatives (short futures, short calls and long puts) shall not exceed (in
notional value) the Mutual Funds’ / FPIs’ / Trading Members’ (Proprietary) / Clients’ holding of
stocks.
Long positions in index derivatives (long futures, long calls and short puts) shall not exceed (in
notional value) the Mutual Funds’ / FPIs’ holding of cash, government securities, T- Bills and
similar instruments
Above, additional position limits mentioned hereunder shall be available to Trading Members
(Proprietary) / FPIs / Mutual Funds / Clients:
a. Equity Index Futures Contracts: Rs. 500 Crores.
b. Equity Index Options Contracts: Rs. 500 Crores.
In F&O shares if that shares goes on circuit by 10% then trading will be stopped for 15 mins.
F&O banned share will not be allowed for intraday trading
On 23 March 2020, SGX Nifty at 8 am was around 7,750 down by -1025 point (11.69%) and Dow
Futures was at 18,200 down by 4.41%.
Nifty open at 7,947 with a gap down of -794 points and got triggered by -10% down side at 7,903
before 1 pm at 9:56 am and as per the SEBI rule trading was halted for 60 mins and resumed at 10:57
am and during that time Dow Futures was also down, over all Asian Index were also down and with this
step of SEBI to regulate the ongoing volatility had negative impact on the market so there was no
recovery shown from the circuit breaker level in fact market went down more and closed at 7,610.25.
Finance Minister Nirmala Sitharaman press conference was going to held at 2 P.M IST on 24th March
2020 so at round 8 am SGX Nifty was at level of 7,986 up by +430 points (5.67%) and Dow futures at
19197 up by 3.78%. Nifty open at 7849 with a gap up of +414 points and closed at 7801.05 (+2.51).
Following are the highlights of the press conference:
(Source: https://www.cnbctv18.com/market/finance-minister-nirmala-sitharaman-coronavirus-stimulus-
package-fm-sitharaman-covid-19-government-coronavirus-stimulus-5545901.htm)
The last date for income tax returns for FY18-19 was shifted to June 30.
For delayed deposit of TDS, interest has been reduced to 9 percent from 18 percent
All compliances under Income Tax Act, Wealth Tax Act, Benami Transaction Act, Black Money
Act, Vivaad se Vishwaas, have been extended to June 30, 2020
Last date for filing March, April and May GST returns extended to June
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Vol-40-Issue-68-March-2020
Relaxed board meetings by 60 days for next two quarters
The debit card holders can withdraw from ATMs free of cost for 3 months, there will be no
minimum balance requirement fee imposed by bank.
Following figure (Fig 4.4.2) shows India VIX on 24th March 2020 on 4 min candle. India VIX touched
its historical peak of 85.13 on November 17, 2008, in the aftermath of the collapse of Lehman Brothers.
From past few year India VIX was below 30 but on 24th March 2020 it touched the level of approx.
86.50 which is almost equal to levels of VIX in 2008.
Fig 4.4.2: India VIX on 24th March 2020 on 4 min candle
Source: Zerodha
Whenever the market is in oversold region then its expected to bounce from the lower level. Now Nifty
is currently in oversold region as per the RSI indicator so its expected to take a bounce.
Event: On 24th March 2020, after market hours at 8:00 P.M IST Prime minister Narendra Modi
announced nationwide lockdown for 21 days because of Covid-19.
On 25th March, SGX Nifty at 8:00 am was around 7,717 down by -166 points (-2.22%) and Dow
Futures at 20,398 down by -221 points (-1.07), Nifty open at 7735 gap down of -117 point and in
afternoon Dow futures were up by +363 points at level of 20,971. Nifty closed at level of 8317.85 with
a gain of 6.62%.
Event: Press Conference was held by Finance Minister Nirmala Sitharaman at 1:00 PM IST on 26 th
March 2020.
On 26th March 2020, Last day of monthly expiry, at 8:30 AM SGX Nifty is at 8325 up by +9.50 points
(0.11%) and Dow Futures its up by +51 points at level of 21,069. Nifty open at 8,452 gap up of +151
points there was press conference held by FM Nirmala Sitharaman at 1:00 PM IST which has boosted
the confidence in the market and market closed at day high at level of 8,641.45 with a gain of +3.89%.
Following are the highlights of that press conference.
(Source: https://www.businesstoday.in/current/economy-politics/nirmala-sitharaman-press-conference-
fm-address-media-1pm-coronavirus-relief-package-expected/story/399287.html)
Insurance cover was announced for front line workers and expresses her gratitude to ASHA
workers, doctors, sanitary workers, para-medics of Rs 50 lakh per person
No one will go hungry. The PM Gareeb Kalyan Scheme package is worth Rs 1.7 lakh crore and
announces 5kg of rice or wheat free of cost for the needy.
Women Jan Dhan account holders will receive Rs 500 in their accounts so that they can take care of
their households. This will happen for the next 3 months.
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Vol-40-Issue-68-March-2020
Under PM Gareeb Kalyan, govt will pay the EPF contribution for both employer and employee for
the next 3 months. This is for establishments with upto 100 employees where 90 per cent earn less
than Rs 15,000 per month, this will benefit 4.8 crore.
Workers' welfare fund of Rs 31,000 crore to be utilised for construction workers.
Overall sentiments of the US market is also positive in the hope of conora virus stimulus package so
Dow Jones showed a rally for 3 days i.e 24, 25 and 26 March 2020. Senate finally approved the largest
economic stimulus package of $2 trillion bill to the House as Congress seeks to give American families
and businesses a financial shield against the ravages of the new coronavirus pandemic.
(Source: https://www.wsj.com/articles/trump-administration-senate-democrats-said-to-reach-stimulus-
bill-deal-11585113371)
Fig 4.4.3: Dow Jones Movement on 1-day candle
Source: Investing.com
From the above graph (Fig 4.4.3) we can see that after 3 days rally i.e i.e 24, 25 and 26 March 2020
because of the stimulus package which was declared in 26th after that market lost all this strength.
Similarly, on 27th March 2020 at 10:00 A.M IST, RBI Governor declared massive rate cut, liquidity
measure, Loan hold etc after that market again lost all its strength after reaching a level of 9,040 after
the speech it closed at 8,674.
(Source: https://www.cnbctv18.com/economy/rbi-rbi-live-shaktikanta-das-rbi-governor-mpc-monetary-
policy-committee-repo-rate-policy-rate-rbi-repo-rate-rate-cut-reserve-bank-of-india-5570221.htm )
FOLLOWING DATA SHOWS FII/FPI TRADING ACTIVITY ON NSE,BSE AND MSEI IN
CAPITAL MARKET SEGMENT(IN RS. CRORES) FROM 9 TH MARCH TO 26TH MARCH
2020
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Table: FII/FPI trading activity on NSE, BSE and MSEI in Capital Market Segment (In Rs.
Crores) from 9th March to 26th March 2020
Date Buy Value Sell Value Net Value
09-Mar-20 6076.45 12672.01 -6595.56
11-Mar-20 9721.28 13236.66 -3515.38
12-Mar-20 9161.05 12636.34 -3475.29
13-Mar-20 8336.42 14364 -6027.58
16-Mar-20 6908.97 10718.9 -3809.93
17-Mar-20 6655.46 10700.15 -4044.69
18-Mar-20 6853.17 11938.52 -5085.35
19-Mar-20 6766.44 11389.37 -4622.93
20-Mar-20 9550.97 12896.92 -3345.95
23-Mar-20 5701.63 8690.92 -2989.29
24-Mar-20 7407.77 9561.12 -2153.35
25-Mar-20 9310.2 11203.56 -1893.36
26-Mar-20 9423.25 9908.03 -484.78
Source: NSE
KEY FINDINGS
The study used various parameter which we discussed already like FII buying/selling, Dow futures etc.
so after carefully analyzing those factors following findings were made:
After analyzing the previous circuit breaker in history of India which first occurred on 17 th May
2004 then on 22 May 2006 but that time market recovered from there circuit break level by 5.5%
and again circuit break was observed on 17th Oct 2007 that time also market recovered by 9% from
its circuit break level. Very recent circuit break was because of financial crisis resulted in circuit
break in India on 21& 22 Jan 2008 which was back to back and both the days after the circuit break
market has recovered from lower levels by 1.5% and 4.5% approximately. Now after observing the
past days its seen that market on the intraday bases usually recovers from its circuit break level
that’s same thing was again repeated on 13th March 2020 NSE Nifty50 hit its lower circuit at
8,624.05, down by -966.10 points or 10.07 per cent. The trading has been halted for 45 minutes. In
pre-open session at 10:05 am Nifty 50 was down by approx. -10.79% at level of around 8,555 and
market opened again at 10:20 am and during that time DOW futures were showing recovery of
+800 points from lower levels, and Dow futures at around 10:16 am IST was at around 21,239 up
by +154 points and US/Rupees was also showing recovery from lower levels at 10:17 am its around
USD/INR 74.09 up by +0.16 (0.22%).Nifty closed at 9955.20 up by +15.43% from circuit break
level. On 23rd March 2020 circuit break happend Nifty open at 7947 with a gap down of -794 points
and Nifty got triggered by -10% down side at 7903 before 1 pm at 9:56 am and as per the SEBI
rule trading was halted for 60 mins and resumed at 10:57 am and during that time Dow Futures was
also down and over all Asian Index were also down so market closed at 8263. So on 23 rd March
2020 there was no recovery seen after the circuit break happened. So how market react after the
circuit break is difficult to understand but it completely depends on that day current situation like
Dow futures, USD/INR movement.
In 2nd week of March 2020, BRENT started trading at levels below 30 USD because of outcome
from the OPEC meeting between Russia and Saudi Arabia which has resulted that Saudi Arabian
Oil Co. decided to boost production to 12.3 million barrels a day in April. On 23 March 2020 Brent
had hit $23 per barrel which was lowest in 18 years. In 2018-19, India spend $87 billion on oil
imports. In the event that the crude oil costs keep on staying low, India could see its general import
charge descend. For each drop of a dollar in crude price, India's import charge descends by nearly
Rs 3,000 crore. Even though it low oil prices is good for Indian economy but there was no
constructive outcome or positive impact was seen in Indian stock market
Page | 346 Copyright ⓒ 2020 AuthorsStudies in Indian Place Names
(UGC CARE Journal) ISSN: 2394-3114
Vol-40-Issue-68-March-2020
When the market is in over sold region as per the RSI Indicator then market is expected to take a
positive bounce but this doesn’t mean that now the uptrend has started its just a normal pull back
which should not be trusted. For this current simulation of corona virus any V-shape recovery is
only shorted. There was a V shaped recovery was observed from 25 th March to 27th March which
was just because of the rate cut and financial aid once the RBI governor announced the rate cut
market stated booking their profit at upper level around 9,000 and again down trend started.
As per the observation in this current situation of Covid-19 market is just reacting to the corona
virus cases in domestic as well as international market. Indian as well as other Asian Stock market
is almost trading on the basis of Dow futures.
Financial aid will no doubt give a recovery in market that’s what was seen in US market when $2
trillion stimulus package was given and in Indian when RBI announced the rate cut but after all this
also market will book their profit of the temporary bounce and again downtrend starts. Pushing
money in the market is not the solution of this Corona virus. Market will actually recover when new
cases of corona virus affected people will reduce in their domestic market like China has started
recovering from the Corona Virus and same is reflected in their stock market.
This is certainly derived that market will never react for any discounted news even when China
recovers and it has no swing on positive impact on the market as market has already been
discounted in consideration with news that China has marginally recovered. Market will react only
to something extra to the discounted news.
As per the observation of FII data, FII is continuously selling in the Indian market and because of
that Index in going down.
When SEBI announced the regulatory measure over the 4th weekend for the stock market like
Market Wide Position Level may be Revised to 50% previously it use to be 95% then only that
stock would be ban but now even if it reaches 50% then its banned, Margin level requirement etc
then when the market open on 23rd March 2020, market sentiments were negative resulted in circuit
break. It was also observed these restrictions has led to reduction in the positions in the market but
have increased the volatility as now a smaller number of buyer sellers will be there in trade.
It was observed that when the Indian Rupees gets stronger in comparison to US dollar then Indian
Stock market is likely to go up. Its likely said that under this scenario No one can predict the bottom
is it 7500 or will be go even below that. Almost all the sectors are affected in India because of this
pandemic, but major sectors are Metals, Aviation, Banks & NBFC’s. This market is not a bottom
fishing where all good blue-chip stocks have corrected by more than 20% but now market is more
like a falling knife.
CONCLUSION
This study attempts to examine the Nifty movement at the time when market all over the globe have
corrected by more than 20% which has pushed almost all the indices in the World into the bear market
territory. As on 23rd March 2020, Nifty has shown a correction of almost 38.8% from its recent high.
There are various sectors which has affected global market because of this Covid-19 pandemic are
aviation, hospitality/ tourism, oil and gas, automotive, consumer products, consumer electronics and
semiconductors. If we talk just about the Indian market then major sectors affected because of the virus
are Metals, Banks & NBFC’s, Automobile, Aviation, Supply chain etc.
As per the observation, FII are continuously selling in the market (Table), as there is a positive
correlation between the Foreign institution investment and movement of Nifty or Sensex (Aswini A.
and Mayank Kumar; 2014) & (Raja Mannar Budur;2017) if the selling continues then Nifty is
expected to go down. FIIs affect volatility of Nifty returns, particularly their selling activities and
foreign investors are feedback traders and amplify the financial market volatility (Vaishali S. Dhingra,
Shailesh Gandhi, Hemantkumar P. Bulsara, 2016).
In the month of march 2020, Indian market had 2 circuit break 13 th March 2020 NSE Nifty50 hit its
lower circuit at 8,624.05, down by -966.10 points and market opened again at 10:20 am and during that
Page | 347 Copyright ⓒ 2020 AuthorsStudies in Indian Place Names
(UGC CARE Journal) ISSN: 2394-3114
Vol-40-Issue-68-March-2020
time DOW futures were showing recovery of +800 points from lower levels & government mentioned
that they are continuously monitoring the situation, Nifty closed at 9955.20 up by +15.43% from circuit
break level.So there was recovery seen from the lower levels as per the past circuit break in history of
Indian market, the index has significantly recovered from its low/high on the same day when trading is
resumed after the halt.( Latha S Chari, Pradiptarathi Panda, Sunder Ram Korivi; 2017-18). On
23rd March 2020 circuit break happen Nifty got triggered by -10% down side at 7903 and resumed at
10:57 am and during that time Dow Futures was also down and over all Asian Index were also down so
market closed at 8263. So on 23rd March 2020 there was no recovery seen after the circuit break
happened. So how market react after the circuit break is difficult to understand but it completely
depends on that day current situation like Dow futures, USD/INR movement.
In 2008, investors has witnessed a dark year in the history of Indian stock market. It is evident that there
is high volatility and variance in mean returns during bull phase whereas low volatility in the bear
phase. (Sunaina Kanojia, Neha Arora; 2016). India VIX touched its historical peak of 85.13 on
November 17, 2008, in the aftermath of the collapse of Lehman Brothers. From past few year India
VIX was below 30 but in March 2020 it touched the level of approx. 86.60 on 24 th march which is
almost equal to levels of VIX in 2008. India VIX can be very useful in employing timing strategies in
stock market trading. The returns can be controlled by shifting the portfolio from midcap to large cap
stocks when India VIX goes up and shifting the portfolio from large-cap to midcap when India VIX
goes down.(Ashok Bantwa;2017). We have seen that when SEBI announced regulatory measures for
ongoing volatility this was effective from 23th March for a period of 1 Month which had negative
impact on the sentiments of market which led to circuit breaker on that day and when government is
about to announce the financial aid package then there is a hope rally seen in the market. With so much
volatility in the market after 2008, almost all the large cap companies has corrected by more than 15%
giving a opportunity for the long term investor to invest in blue chip stock through various ways like
Mutual fund, buying stocks etc.
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