Sebi's move to curb volatility didn't work for the market as rules were applicable for both long and short positions which makes difficult new long positions while short positions caused more price damage due to lack of liquidity.
Investor wealth took a massive beating of Rs 14.22 lakh crore on Monday as markets went into a tailspin, dropping a whopping 3,934.72 points as lockdown in several states sent jitters to investors.
Sentiment turned extremely negative after several Indian states announced lockdown following rise in the number of coronavirus cases.
As the benchmark indices posted their worst ever one-day crash, the market capitalisation of BSE-listed companies too plunged Rs 14,22,207.01 crore to Rs 1,01,86,936.28 crore.
The BSE benchmark index tanked 3,934.72 points or 13.15 per cent to close at 25,981.24.
During the trade, it hit a one-year low of 25,880.83.
In the first hour of trade on Monday, the benchmark indices cracked over 10 per cent, triggering a 45-minute trading freeze as coronavirus-led lockdowns across the world stoked fears of a massive global recession.
Axis Bank was the top loser in the Sensex pack, dropping over 28 per cent, followed by Bajaj Finance, IndusInd Bank, ICICI Bank, Maruti and L&T.
"It was another black Monday for the Indian equity market as the number of cases is rising exponentially across the world as well as in India where almost overall India is under lockdown situation.
“Sebi's move to curb volatility didn't work for the market as rules were applicable for both long and short positions which makes difficult new long positions while short positions caused more price damage due to lack of liquidity," TradingBells senior analyst Santosh Meena said.
"We can say that almost the worst-case scenario has been discounted by the market in today's trading session but it is difficult to say about it with confidence amid a very uncertain event of coronavirus.
“If any minor relief comes in front of coronavirus then we can expect a smart recovery in the market," he added.
Trading resumed around 1100 hours but markets failed to bounce back.
"After a smart rally on Friday, selling pressure resumed in the Indian markets that too with greater intensity as the benchmark indices recorded its biggest single day decline.
“The wider spread of coronavirus cases in India and lockdown in major cities impacted sentiments," according to Ajit Mishra, VP - Research, Religare Broking Ltd.
Further, the global cues too remained unsupportive.
Therefore the Nifty index ended lower by 13 per cent to close at 7,610 levels.
The broader markets and all the sectoral indices ended with sharp losses wherein banking, capital goods and auto were the top losers, he said.
"The rising number of cases of coronavirus has definitely impacted economic activity across the globe.
“On the domestic front as well increase in number of cases has forced the government to lockdown major cities impacting economic activity," he said.
"Going forward, we expect the markets would continue to remain volatile as increase in number of cases in India would lead to selling pressure.
“Meanwhile, market participants would pin their hopes on stimulus package from the government to reduce the economic impact of coronavirus cases," Mishra added.
On the BSE, 2,037 companies declined, while 232 advanced and 132 remained unchanged.
As many as 1,180 companies hit their one-year low level on Monday.
BSE sectoral indices were also hit hard, led by bank, finance and capital goods, tanking up to 16.81 per cent.
Global markets also roiled after several countries across the world announced lockdown to control the spread of the pandemic, triggering global recession fears.
Photograph: PTI Photo