Indian shares closed more than 3% lower on Tuesday, as a historic plunge in US oil prices due to a collapse in demand underscored the coronavirus pandemic’s threat to the global economy.

The NSE Nifty 50 index closed 3.03% lower at 8,981.45, while the benchmark S&P BSE Sensex ended down 3.2% at 30,636.71.

US oil futures traded in negative territory on Tuesday, after plunging below zero for the first time in the previous session, on concerns that the sector will run out of storage for a glut caused by the coronavirus lockdown.

India, one of the world’s top importers of oil, tends to benefit from lower oil prices, but Monday’s crash spooked investors as it reflected the extent of the damage the coronavirus had on the global economy, analysts said.

“The terms of trade are decisively favouring crude oil importers, but the demand destruction due to the extended lockdown and worries about the effect of a staggered opening on aggregate demand have hit sentiment,” said Ajay Bodke, CEO and chief portfolio manager at Prabhudas Lilladher in Mumbai.

India extended the world’s largest lockdown to early May to curb the virus spread, with the administration looking at a staggered exit from the shutdown for Asia’s third biggest economy.

Bodke said renewed worries of outflows from risk assets, like emerging market equities by foreign portfolio investors, due to rising insolvencies hitting corporates and financial intermediaries due to decline in oil is another headwind for India.

Private-banking stocks were among the worst hit in Mumbai trading, with Nifty 50-components Axis Bank Ltd, ICICI Bank Ltd and IndusInd Bank Ltd sliding 7.7%-12.2%.

The Nifty Bank Index dropped 5.4% on its worst day so far this month.

Auto stocks also took a beating, with Maruti Suzuki India Ltd dropping 6.2% and Mahindra and Mahindra Ltd falling 6.7%.

Infosys Ltd closed down 3.1% after the country’s No. 2 software exporter suspended its revenue guidance for full-year 2021 as the pandemic froze client activity in the United States and Europe.

Meanwhile, amid the growing concern over COVID-19, 57 per cent of organisations in India expect a moderate to large negative impact on their Business in the next six months, while 46 per cent expect this to last over a 12-month period, a survey revealed on Tuesday. About 19 per cent of the respondents said they expect such an adverse impact to last over a two-year period, according to the survey by Willis Towers Watson, a leading advisory, broking and solutions company.

Only 5 per cent of organisations expect a positive Business impact within the next 12 to 24 months, said the “COVID-19 India Readiness Survey”.

“The tough economic conditions and anticipated Business impact could drive organisations to consider workforce optimisation,” Rohit Jain, Head of India, Willis Towers Watson, said in a statement.

“Employers should take an emphatic and considerate approach and evaluate options such as staff redeployment, reduced working hours/days, long service leave, sabbatical, furlough, hiring freeze and voluntary pay cuts, before any serious consideration of a workforce reduction,” Jain added.

The survey conducted from March 20-31 involved 103 organisations in India.

Data was collected from nearly 417,000 employees working across sectors such as financial services, healthcare, IT & telecom, manufacturing, public sector & education and wholesale & retail, with the survey results presented in an aggregate approach.

The results showed that 42 per cent of respondents have not taken a decision on salary increment budgets for this year, while 33 per cent indicated that performance appraisals and bonus pay-outs will happen as planned.

Furthermore, 77 per cent said that there will be no reduction in salaries and 53 per cent responded that there have been no adjustments to the sales incentive pay-outs.

Almost one in three respondents anticipate that their 2020 annual bonus for executives and employees will be impacted, while 17 per cent expect an impact on their 2020 long term incentive plans, the survey revealed.

Over 80 per cent of organisations plan to review their work-from-home policy, and 46 per cent indicated that they would reimburse employees the expenses incurred for setting up their home internet for work purposes, showed the results. “The rate at which corporates and employees have adopted technology in the last couple of weeks is truly remarkable. This combined with large numbers of employees working remotely, also leaves organisations vulnerable to cyber-attacks,” said Jain.

Agencies