Sensex deep in the red amid rising Covid-19 cases: Key factors hurting market
With parts of Europe going through the third wave of infections and regional lockdowns, global GDP growth is likely to be below estimates, said an analyst.
By Shubham Raj, ETMarkets.com | Updated:
NEW DELHI: Benchmark indices registered sharp losses on Wednesday tracking weakness in the international market as the US dollar rose and Covid cases continued to rise, resulting in investors’ flight to safety.
The markets had discounted sharp recovery in global GDP growth in 2021. But now, with parts of Germany, France and Italy going through the third wave of infections and regional lockdowns, global GDP growth is likely to be below estimates, said an analyst.
“The recent crash in crude is a reflection of reduced demand emanating from declining economic activity. In India, the second wave in some prominent cities is adding to the concern. FII and DII buying is down. Investors may wait and watch. Declines may be used to buy quality large-caps in IT, pharma and financials where there is good earnings visibility," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Factors driving markets
After opening in the red, benchmark indices dropped further. BSE flagship Sensex ended 871.13 points or 1.74 per cent lower at 49,180.31. NSE benchmark Nifty followed, and settled at 14,549.40, down 265.35 points or 1.79 per cent.
"Nifty is currently in a zone of resistance where a trend is expected to emerge. The zone is between 14,750-14,900. If we are unable to get past this patch we could turn from here and resume the current downtrend. That could lead us to levels closer to 14,400. If the market can sustain above 14,900, the index could endeavor a move to 15,300," said Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments.
In the 50-share pack Nifty, Asian Paints was the biggest gainer, up 1.60 per cent. Cipla, Dr Reddy’s Labs, Power Grid, Divi’s Labs, Sun Pharma, NTPC and Adani Ports were among other gainers.
Tata Steel was the top loser in the pack, down 2.56 per cent. Hindalco, SBI, ONGC, ICICI Bank, JSW Steel, Tata Motors, IndusInd Bank, Axis Bank and Reliance Industries were other losers in the pack.
Broader markets
Broader market indices traded with cuts in morning deals, but managed to outperform their headline peers. Nifty Smallcap was down 0.33 per cent while Nifty Midcap declined 0.04 per cent. Broadest index on NSE, Nifty 500 was down 0.44 per cent.
Bank of India, Adani Total Gas, Trent, Affle India, Granules India and Just Dial were gainers from the space, while Rail Vikas Nigam, Dixon Tech, IEX, Future Retail, Oil India and Oberoi Realty were under selling pressure.
MSCI's broadest index of Asia-Pacific shares outside of Japan was off 1 per cent, a day after falling 0.9 per cent. It went as low as 676.46 points, a level last seen on March 9.
Japan's Nikkei stumbled 1.8 per cent while South Korea's KOSPI slipped 0.5 per cent. Chinese shares were in the red for a second straight day with the blue-chip CSI300 index down 1.2 per cent. Hong Kong's Hang Seng skidded 1.7 per cent.
On Wall Street overnight, the Dow Jones Industrial Average fell 0.94 per cent, the S&P 500 lost 0.76 per cent and the Nasdaq Composite dropped 1.12 per cent.
The markets had discounted sharp recovery in global GDP growth in 2021. But now, with parts of Germany, France and Italy going through the third wave of infections and regional lockdowns, global GDP growth is likely to be below estimates, said an analyst.
“The recent crash in crude is a reflection of reduced demand emanating from declining economic activity. In India, the second wave in some prominent cities is adding to the concern. FII and DII buying is down. Investors may wait and watch. Declines may be used to buy quality large-caps in IT, pharma and financials where there is good earnings visibility," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Factors driving markets
- Yields fall: The dollar index rose, while Treasury yields fell, after Fed Chairman Jerome Powell told US lawmakers he expected inflation to rise over the year, but it would be "neither particularly large nor persistent".
- US not out of the woods: Treasury Secretary Janet Yellen said the US economy remains at risk as she fielded lawmakers' questions about possible infrastructure and tax increase plans under consideration.
- Covid-19 infections: India continues to log over 40,000 cases a day while the number of deaths has risen to the highest level so far this year. Meanwhile, many states in the country banned Holi celebrations to curb the spread.
After opening in the red, benchmark indices dropped further. BSE flagship Sensex ended 871.13 points or 1.74 per cent lower at 49,180.31. NSE benchmark Nifty followed, and settled at 14,549.40, down 265.35 points or 1.79 per cent.
"Nifty is currently in a zone of resistance where a trend is expected to emerge. The zone is between 14,750-14,900. If we are unable to get past this patch we could turn from here and resume the current downtrend. That could lead us to levels closer to 14,400. If the market can sustain above 14,900, the index could endeavor a move to 15,300," said Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments.
In the 50-share pack Nifty, Asian Paints was the biggest gainer, up 1.60 per cent. Cipla, Dr Reddy’s Labs, Power Grid, Divi’s Labs, Sun Pharma, NTPC and Adani Ports were among other gainers.
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Tata Steel was the top loser in the pack, down 2.56 per cent. Hindalco, SBI, ONGC, ICICI Bank, JSW Steel, Tata Motors, IndusInd Bank, Axis Bank and Reliance Industries were other losers in the pack.
Broader markets
Broader market indices traded with cuts in morning deals, but managed to outperform their headline peers. Nifty Smallcap was down 0.33 per cent while Nifty Midcap declined 0.04 per cent. Broadest index on NSE, Nifty 500 was down 0.44 per cent.
Bank of India, Adani Total Gas, Trent, Affle India, Granules India and Just Dial were gainers from the space, while Rail Vikas Nigam, Dixon Tech, IEX, Future Retail, Oil India and Oberoi Realty were under selling pressure.
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Amid the heightened volatility in the market due to rising risks of bond yields and surge in Covid-19 cases, focus will remain on stock-specific action. Here are a few stocks that analysts believe can make good money for investors in the next few weeks:
MSCI's broadest index of Asia-Pacific shares outside of Japan was off 1 per cent, a day after falling 0.9 per cent. It went as low as 676.46 points, a level last seen on March 9.
Japan's Nikkei stumbled 1.8 per cent while South Korea's KOSPI slipped 0.5 per cent. Chinese shares were in the red for a second straight day with the blue-chip CSI300 index down 1.2 per cent. Hong Kong's Hang Seng skidded 1.7 per cent.
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On Wall Street overnight, the Dow Jones Industrial Average fell 0.94 per cent, the S&P 500 lost 0.76 per cent and the Nasdaq Composite dropped 1.12 per cent.
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