With fresh cases of Covid-19 infections shooting up close to 3 lakhs, the Indian markets went into a tailspin with a 1,400-point plunge in the early trading hours of Monday.
The S&P BSE Sensex was trading at 47,561.41, lower by 1,270.62 points or 2.60 per cent, early on Monday from its previous close of 48,832.03. It opened at 47,940.81 at the intraday high of 47,940.81 points. The NSE Nifty was trading at 14,275.85, lower by 342.00 points or 2.34 per cent from its previous close. A massive selloff overdrive drove the markets down.
All Sensex components were in the red. Bajaj Auto was the top loser in the Sensex pack, dropping over 5 per cent, followed by IndusInd Bank, SBI, ICICI Bank, Bajaj Finance and Axis Bank.
“The health crisis India is going through and localised lockdowns and restrictions on economic activity warrant a market correction,” says VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services. The targets of around 11 per cent GDP growth and above 30 per cent earnings growth for FY22 that the market had assumed before the second wave broke out are likely to fall short, he says.
India’s tally of Covid-19 cases crossed 1.50 crore on Monday morning with a record single-day rise of 2,73,810 fresh cases of infection, while the active cases surpassed the 19-lakh mark, according to the Union health ministry. The total number of Covid-19 cases mounted to 1,50,61,919 and the death toll increased to 1,78,769 with a record 1,619 daily fatalities, the ministry says.
Registering a steady increase for the 40th day in a row, the active cases have increased to 19,29,329 comprising 12.81 per cent of the total infections, while the national Covid-19 recovery rate has dropped to 86 per cent.
“The steady rise in Covid positive cases and the steady decline in recovery rates are areas of serious concern,” says Vijayakumar. “But, this negativity need not reflect fully in the market since the global clues are positive. The sharp recovery in global growth led by the US and China augur well for markets globally.”
On the currency front, the USD/INR Future traded firm at 74.70. “The currency pair is trending firm against the dollar due to the record high Covid cases in India. The increase in Covid-19 cases in India has dampened investor sentiment and the expectation is that rupee to steadily weaken. The rupee is expected to trade in a zigzag pattern with a trading range of 74.50 to 75.50 for further sessions, with a downside bias,” says Kshitij Purohit, Product Manager, Currency & Commodities at CapitalVia Global Research Limited. Any rupee recovery above the 74.50 level would be unsustainable and serve as a strong resistance level, he says.
Bourses in Shanghai, Hong Kong, Seoul and Tokyo were trading on a positive note in mid-session deals. The international oil benchmark Brent crude was trading 0.49 per cent lower at $66.44 per barrel.
