Soon after the announcement by the Prime Minister Narendra Modi regarding the nationwide 21-day lockdown almost 17 days ago, several Indians engaged in panic buying and hoarding within the three hours between the announcement and the commencement of the lockdown even though it was clarified that all essential items will be available in the markets during this period of isolation. This had a huge effect on the stocks as the FMGC went on to overshadow the Sensex.
“Sensex and Nifty”
The current Sensex and Nifty closed towards the much-awaited last trading session of FY 20. Though the Sensex ended 1,028 points higher at 29,468, Nifty went on to climb 316 points to
Total 25 out of 30 stocks on Sensex and 40 out of 50 scrips on Nifty closed in the green. India VIX, the index gauging market volatility, dropped 10.2% or 7.4 points to 64.5 today. In the previous session, Sensex ended 1,375.27 points or 4.61% lower at 28,440.32, and Nifty fell 379.15 points, or 4.38%, to close at 8,281.10.
The Head of Research at Geojit Financial Services, Vinod Nair, suggested that as all the sectoral indices were up and the volatility index was down by 10 percent, the Chinese data along with the Industrial production, especially in the metal, Pharma, and FMGC.
To combat the coronavirus, all economies are facing a great economic crisis in an attempt to manage the pandemic.
With the sudden rise in the consumption and hoarding of essential items due to extreme panic among citizens led to the great overshadowing of the Sensex. As the stocks seem to be close to crashing with the sudden fall in economies, the pharmaceutical sectors and essential services, as well as related industries, continue to keep the economy from complete stagnation. The slump caused by the lockdown may even lead to new FMCG products. Godrej Group is talking to the government on how to work through production and supply chain constraints for its FMCG arm Godrej Consumer Products Ltd. GCPL is awaiting the government’s approval to resume factory operations, albeit with 50% of its manufacturing and distribution workforce to ensure the availability of essential goods and minimize the impact of the lockdown, both for the consumer and the company.
However, due to the shutdown of most markets, even the FMCG sector has faced losses. But as the products flew off the shelf due to the hoarding mentality of the general public, the numbers rose in favor of this sector as compared to the stock market. The FMCGs have been moving fast to replenish their stocks in order to reshelve and thus have increased their production. India’s largest dairy company Amul India said the company has increased production by 15-20% for its biggest-selling products such as tetra pack milk, paneer, cheese, and butter. Godrej Consumer Products is stepping up production of soaps, hand washes, and sanitizers. Managing director Vivek Gambhir said soap production is up 30% and hand washes by 3.5 times. Soap prices have been kept unchanged.
The global fall in shares and the faltering in the global economy has led to the value of the dollar rose to 76.07.
The IMF had recently stated that while the world will face a great recession, both the Indian and Chinese economies may survive but did not give any explanation to this statement.
Though the local markets cannot ration the supply to the citizens, they have urged the people not to engage in the practice of hoarding and panic buying due to the limited stock.