Global financial markets are going through challenging times. Asset classes be it equity, fixed income, commodities or even gold, are witnessing downward pressure on prices as investors grapple with emerging unknowns. With an increasing number of coronavirus cases being reported, the health crisis that is currently plaguing the world is getting compounded on an almost daily basis. According to reports, coronavirus has infected more than 2,75,000 people and killed more than 11,000 across the world. On the other hand, ~92000 people have recovered. India has reported 5 deaths and has crossed the 250 cases mark. Stock markets across the globe witnessed a sharp selloff as risk aversion grew and investors gravitated towards ‘perceived’ risk assets. The yield on 10-year benchmark federal paper on Friday fell to 6.337 per cent compared with 6.410 per cent in the previous trading session causing the Reserve Bank of India (RBI) to announce an additional purchase of Rs 30,000 worth of government securities through OMOs. The Indian Rupee slid to a record low against the US Dollar, breaching the $75 mark during the week. The slide was partially triggered by the exodus of Foreign Portfolio Investors (FPIs) from the Indian markets. So far this month, foreign portfolio investors (FPIs) have net sold Indian equity worth a whopping Rs 47,897 crore while domestic institutional investors have net bought Indian equities worth Rs 41,729 crore. Adding to the mayhem, crude oil price continued to fall as well breaching the $25/barrel mark.
In an attempt to mitigate the impact of the coronavirus on economic activity and maintain financial stability, central banks across the globes announced coordinated rate cuts and measures to infuse liquidity into the system. In an emergency move, the US Federal Reserve announced a cut in its benchmark rate dropping it to zero. Along with the rate cut, the Fed also launched a new massive $700 bn quantitative easing program to shelter the economy from the effects of the coronavirus. The US decision triggered emergency policy easings by central banks in New Zealand, Japan, South Koreaand Australia. Additionally, the European Central Bank (ECB) said that it is launching a new, expanded program to buy financial assets. The ECB will buy 750 billion euro ($820 billion) in bond-buying program to help the region's economy through the coronavirus outbreak.
Despite the easings, investor concerns were not allayed and the selling continued across markets. This is not a time for guesswork. Best to stay disciplined, continue with the SIPs and avoid any trading activity.