The Sensex on Monday crashed 871 points as investors feared the second wave of coronavirus in the country would derail growth.
As the markets tanked — the Sensex fell 1449 points intra-day — the six-member monetary policy committee (MPC) began its three-day deliebrations while corporate India warmed up to announce its March quarter results from next week.
Though India Inc is expected to report good numbers, the rising Covid-19 cases in the country may affect corporate performance in the first quarter ended June 30, 2021.
“April is likely to be highly volatile with fourth quarter earnings, rising Covid cases and higher bond yields to determine the trend,” said Hemang Dani, head of equity strategy, broking and distribution at Motilal Oswal Financial Services.
Latest data showed the number of coronavirus cases hit a record daily high of over one lakh in the country. It led to badly affected states such as Maharashtra announcing strict measures which is expected to hurt economic activity. Various other states have also come out with measures that is expected to affect people’s movement.
On Monday, Care Ratings said the measures announced in Maharashtra will lead to a decline in output by around Rs 40,000 crore for the state and that it will erode 0.32 per cent from the gross value added growth at the overall domestic economy level.
Maharashtra is the largest state in the country in terms of gross state domestic product (GSDP) and has a share of around 15 per cent in GVA, followed by Tamil Nadu, Gujarat, Uttar Pradesh and Karnataka. While these states have also put restrictions, they are not of the same scale as Maharashtra.
“The market witnessed a huge selloff on Monday as India’s second wave of Covid-19 is getting bigger than anticipated and is expected to ruin the pace of economic recovery. High valuations added further concern because of a possible downgrade in the first quarter 2021-22 earnings,” said Vinod Nair, head of research at Geojit Financial Services.
The 30-share Sensex opened lower at 50020.91 and hit an intra-day low of 48580.80 — a fall of 1449 points as investors sold banking and other stocks. It later pared some losses to finish at 49159.32, down 870.51 points, or 1.74 per cent. The broader NSE Nifty sank 229.55 points, or 1.54 per cent, to 14637.80.
Financial stocks led the selloff. Bajaj Finance was the top laggard in the Sensex pack, plunging around 6 per cent, followed by IndusInd Bank, SBI, M&M, Axis Bank, Bajaj Auto and ICICI Bank.
Some experts maintain that investors should use the opportunity to pick up quality stocks. They added that though the country is witnessing a surge in Covid-19 cases at present, its pace will decline as people get vaccinated.
“Overall markets are likely to remain in a consolidative mode for some time awaiting fresh positive triggers. Hence, investors would do well to gradually accumulate good quality companies on any declines in the market,” said Siddhartha Khemka, head of retail research, Motilal Oswal Financial Services.
Bourses in Seoul and Tokyo ended on a positive note. Markets in Shanghai, Hong Kong and Australia were closed for holidays. Stock exchanges in Europe were also closed.
