Sensex ends 10-day rally, crashes 1k pts
Indian shares closed lower on Thursday, ending their longest gaining streak in nearly six years, as investors locked in profits in IT companies and bank stocks.
Snapping its 10-session winning run, equity benchmark Sensex plunged 1,066.33 points, or 2.61%, to end at 39,728.41. The broader NSE Nifty crashed 290.70 points, or 2.43%, to 11,680.35.
Global equities cratered as hopes faded of a pre-election stimulus deal in the US, while multiple countries in Europe braced for a second round of lockdowns to curb rising coronavirus disease (Covid-19) cases, jeopardising the already shaky economic recovery.
Back home, market participants were also eager to book profits after the recent rally amid already stretched valuations, traders said.
“The worry is that banks had run up too sharply in the past 15 days and we are seeing some amount of profit booking and correction because no one really knows what the actual impact on NPAs (non-performing assets) is from Covid-19,” said Umesh Mehta, head of research at Samco Securities, Mumbai.
The decline come a day after the Supreme Court set its hearing on waiving interest on loans under moratorium to November 2, with banks hoping that the apex court will not offer any
A man walks next to the Bombay stock exchange building.
more reprieve to borrowers beyond the waiver on interest for loans up to ₹2 crore, which the government has agreed to pay.
The market will be “volatile because valuations have moved above long-term average multiples,” Shibani Kurian, head of equity research at Kotak Mahindra Asset Management, said in an interview with Bloomberg Television. The Sensex is trading at 21 times estimated earnings, about two standard deviations above its five-year average.
Barring Asian Paints, which inched up 0.32%, all Sensex constituents closed in the red.