India's Nifty dives as Fed rate cut fails to calm coronavirus fears

Chandini Monnappa

BENGALURU, March 16 (Reuters) - Indian shares sank on Monday as the U.S. Federal Reserve's emergency move to cut rates back to near zero and disappointing economic data out of China spooked investors about the impact of the coronavirus outbreak on global growth.

The surprise rate cut on Sunday by the Fed and its measures to ensure liquidity in dollar lending ahead of a scheduled meeting that had been set for Tuesday and Wednesday sent U.S stock index futures tumbling to their daily down limit..

"Major concern is about the steps being taken to contain the virus spread by the government, stimulus is not something that is enough to calm nerves right now," said Siddhartha Khemka, head of retail research at Motilal Oswal Securities.

"In India, the number of cases are going up, the volatility index is also high, indicating that markets will remain under pressure."

The rupee, which fell to a record low of 74.508 against the dollar on Friday, was 0.44% weaker at 74.1725 by 0410 GMT.

Indian equities, which rebounded from a steep fall on Friday on hopes of coordinated stimulus measures to combat the impact of the virus, were kept in check on Monday by losses in financial stocks.

The NSE Nifty 50 index slid 5.2% to 9,442.95 in early trading, while the benchmark S&P BSE Sensex dropped 5.4% to 32,2547.79.

India's volatility index rose more than 12%.

Further spooking investors was data out of China that showed the country's industrial output contracted at the sharpest pace in 30 years in the first two month of the year due to the disruptions caused by the virus.

Lockdowns and travel bans spread across the globe over the weekend, affecting tens of millions of people.

On the blue-chip Nifty 50 index, Yes Bank Ltd was the only stock trading in positive territory, surging nearly 45%.

Miner Vedanta Ltd dropped more than 7% and was the biggest loser on the index. The Nifty Metal Index slipped 6.58%.

Shares of cinema hall chains Inox Leisure Ltd and PVR Ltd plunged 15% and 20%, respectively. India on Friday directed theatres to remain closed in some states in a move to contain the spread of the virus.

Shares of IndusInd Bank Ltd slid over 9% while those of State Bank of India were down 8%.

Oil-to-retail conglomerate Reliance Industries Ltd fell as much as 5.4%. (Reporting by Chandini Monnappa in Bengaluru; Editing by Anil D'Silva)