Apprehensions that the rising number of Covid-19 cases in India and globally could delay economic recovery sent stocks slipping into the red again on Wednesday with the benchmark Sensex witnessing the worst-single day fall in almost a month as it crashed 871 points.
Market experts are now cautioning that stock prices could remain under pressure over the next few sessions on reports of a new double mutant variant of coronavirus and a second wave of infection.
Overseas cues were not encouraging either with various countries experiencing a third wave and imposing restrictions that could adversely impact the global economy.
There have been other factors as well that have led to a fall in equity values. Purchases by FPIs have also slowed down. Provisional data from the stock exchanges indicated that they were net sellers worth Rs 1,952 crore. So far in March, they have purchased stocks worth Rs 15,055 crore against Rs 25,787 crore in February. Moreover, the IPO segment is also seeing hectic activity.
In Wednesday’s trade, the Sensex opened lower at 49786.47 and hit an intra-day low of 49120.34 — a drop of 931 points. It, thereafter, ended at 49180.31, a drop of 871.13 points, or 1.74 per cent — its biggest one-day fall since February 26. The broader NSE Nifty dived 265.35 points, or 1.79 per cent, to settle at 14549.40.
“The main reason for the fall on Wednesday included rising cases of Covid-19 in India and across the globe, which could delay economic recovery. This is also evident from the fall in crude prices over the last few days,” said Deepak Jasani, head of retail research, HDFC Securities.
With stocks coming under pressure, impact was felt on the rupee as well and the currency fell by 12 paise to close the day at 72.55 against the dollar.
“The coronavirus fears are resurfacing as cases have started to tick up all over the world. This is dampening the reopening and recovery optimism and will keep the safe-haven dollar demand intact. However, there is IPO euphoria in the market which is keeping the spot rupee below 73 levels,” said Rahul Gupta, head of research-currency, Emkay Global Financial Services.
In the Sensex pack, all shares closed in the red, barring Asian Paints and PowerGrid. M&M was the top loser, falling around 4 per cent, followed by SBI, Axis Bank, ICICI Bank, IndusInd Bank, ITC and L&T.
He added that the market seems doubtful that the vaccination race against the third pandemic wave can be won quickly.
Elsewhere in Asia, bourses in Shanghai, Hong Kong, Tokyo and Seoul fell up to 2 per cent. Stock exchanges in Europe were also trading on a negative note in mid-session deals.
