The benchmark indices continued to succumb to selling pressure due to increasing concerns that global economic growth could be impacted by rising number of coronavirus cases outside China.
At 3:00 pm, the BSE Sensex was quoting at 40,406, weaker by 762 points or 1.8 per cent and NSE Nifty was at 11,843, down 242 points or 2 per cent. In the broader markets, the BSE Midcap index shed 1.5 per cent to 15,452 and Smallcap index lost 1.4 per cent to 14,528. There was weakness across the board, with all the BSE Sensex and Nifty-50 stocks trading in the red.
The European markets, including CAC, DAX and FTSE, had crashed more than 3 per cent in early trades. And the Dow futures slid by over 600 points or 3 per cent in pre-market trades.
The India VIX index, an indicator of volatility in the markets, jumped 23 per cent to 16.9.
Chinese President Xi Jinping said on Sunday the coronavirus epidemic is the country's "largest public health emergency". The death toll from the deadly virus has already climbed to 2,592. The IMF also warned that the deadly epidemic could put an already fragile global economy recovery at risk.
On the commodities front, oil prices plunged this morning; Brent crude futures were down 3 per cent to $56.73 per barrel and US crude futures contract dropped 2.7 per cent to $51.93 per barrel.
Experts reckon that the markets will be volatile this week due to the expiry of February derivative contracts on February 27 and developments surrounding the coronavirus. The US President Donald Trump has arrived in the country for a two-days visit i.e. February 24-25 and his pronouncements will be keenly watched.
AK Prabhakar, Head of Research, IDBI Capital, said, "There is global selloff as the coronavirus is affecting travel and business worldwide. Coronavirus is no longer restricted to China, but has spread to countries such as Italy, Iran and South Korea. It is a global business breakdown. It is advisable to sell everything and sit on cash as Nifty 11,400-11,200 is on the cards." He further added, "Metal shares are falling on the back of huge inventory levels in Chinese manufacturing, which is very negative for metal companies globally".
Metal stocks were leading the decline on the NSE, with Hindalco, Tata Steel, JSW Steel and Vedanta shedding between 5-8 per cent each on the NSE. In the auto space, Maruti Suzuki, Tata Motors, Hero MotoCorp and Eicher Motors shed more than 3 per cent each. RIL, ITC, ICICI Bank, HDFC and Bharti Airtel fell between 1 per cent and 3 per cent each.
The market breadth was weak. Out of 2,551 stocks traded on the BSE, there were 783 advancing stocks as against 1,593 declines.