Sensex dips 1,069 pts on economic worries

Indian markets plunged nearly 3.5% on Monday as disappointment over the stimulus package and the mounting number of coronavirus disease (Covid-19) infections prompted investors to dump stocks.

The BSE Sensex ended at 30,028.98, down 1,068.75 points, or 3.44%, while the 50-share index Nifty closed at 8,823.25, down 313.60 points, or 3.43%. The India volatility index rose 7.58% to close at 40.90, reflecting renewed investor anxiety.

After Prime Minister Narendra Modi announced on May 12 a ₹20-trillion stimulus package and the goal of national self-reliance, the government has rolled out a series of measures addressing small businesses, migrant workers, the farm sector, and rural jobs, among others.

However, analysts said that the stimulus broadly does not address the urgent problems of weak consumption and an unfolding humanitarian crisis.

Foreign institutional investors had invested $1.84 billion in India in May until Tuesday when PM Modi announced the package. In the past week, they have sold shares worth $785.74 million, leading to a 4% fall in stock markets.

According to Deepak Jasani, head of retail research at HDFC Securities, Indian indices ended lower for the third day on Monday, contrary to the trend in Asian and European markets, as the fiscal package disappointed businesses and investors. The extended lockdown and jump in Covid-19 cases also dampened spirits, he added.