Financial Stablility & Development Board should Intervene Now

Nifty has hit lower circuit as it has fallen by more than 10%. Same is true for Sensex too. So trading has been halted for 45 minutes on Indian stock markets. But considering the situation arising due to Corona, it would not enough. SEBI along with other regulators should come together and decide to suspend trade for longer. Financial Stability & Development Council (FSDC) should take over and intervene. May be for days! The kind of panic that has been generated around Corona is not going subside in few minutes only. Allowing trade in this condition may erode the confidence to such an irreversible level that would be very difficult to revive the confidence back.

Reports suggests that because of falling rupee, net outflows of foreign currency for March is at over Rs 33,000 crore in less than two weeks period. Same would be the case of trade front; whether goods or services. At present in India, Sensex has fallen by more than 12000 points in less than one month. Same is true with global stock market. Most importantly, none knows where it all will stop? The scars would be very deep for the world economy in general and for Indian economy in particular as it is already facing a number of problems such as slowing economic growth and banking sector crisis. Because of the peculiar nature of the Coronavirus caused influenza, the movement of goods and human capital is going to be adversely affected in the world economy as a result of the falling human confidence at global level.

WHO should issue global advisory to quarantine and insulate economies and restrict any global movement (goods and human) besides medical emergencies. Now this is the only way to save world economy from Coronavirus pandemic. However Indian has taken some steps at domestic level by closing schools, colleges and cinema halls till 31st March in Delhi and other parts of country but more caution is needed. 

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