Sensex crashes 1,708 pts amid rise in cases
The rupee drops past 75 to a dollar; the Sensex falls 3.4%, the most in two months
The Sensex plummeted 1,708 points while the Nifty crashed below the 14,350-level on Monday as investors pressed the panic button amid the massive second wave of Covid- 19 infections across the country. An unabated fall in the rupee sapped confidence further, traders said. Posting its biggest fall since February 26, the 30- share BSE Sensex sank 3.44% to end at 47,883.38.
ALL 19 SECTOR SUBINDEXES COMPILED BY BSE SLIPPED, LED BY A GAUGE OF PROPERTY AND INDUSTRIAL SHARES
The deepening coronavirus crisis slammed the Indian stocks and currency on concern it will deliver a fresh blow to an economy that’s only just recovering from the worst contraction in nearly seven decades.
The rupee dropped past 75 to a dollar for the first time since August 2020, while the benchmark S&P BSE Sensex Index declined 3.4%, the most in almost two months.
India reported a record 1,68,912 new infections for a day, taking the tally to 1.35 crore cases, the government said on Monday.
With another record daily surge in coronavirus infections, India overtook Brazil to be the second worst-hit country by the health crisis.
The state of Maharashtra, home to the country’s financial capital, Mumbai, is considering a lockdown and could take a final decision this week, a senior government official said.
Reports are emerging of hospital beds running short and immunisation centres turning away people as they run out of vaccines.
That and a vaccine shortage “are unnerving markets and no one is sure whether lockdowns will help bring cases under control,” said Deepak Jasani, head of retail research at HDFC Securities. Given the uncertainty, “the incentive to try and bottom-fish at this point is limited for traders.”
The NSE Nifty 50 index closed 3.53% lower at 14,310.80, while the S& P BSE Sensex ended down 3.44% at 47,883.38. The Nifty 50 has now retreated about 7% and the Sensex is down 9% from their mid-February record highs.
Reliance and HDFC Bank closed Monday’s session more than 3% lower and were the biggest two drags on the Nifty 50.
The rupee weakened to a more than eight-month low of 75.1375 against the dollar.
All 19 sector sub- indexes compiled by BSE slipped, led by a gauge of property and industrial shares.
Tracking losses in equities, the market capitalisation of BSE-listed companies eroded by ₹ 8,77,435.5 crore to ₹2,00,85,806.37 crore. Indus-Ind Bank was the biggest loser among the Sensex companies, declining 8.60%, followed by Bajaj Finance, State Bank of India, ONGC, Titan, Mahindra & Mahindra and Axis Bank.
The country’s virus resurgence has prompted some brokerages to reconsider their preference for stocks, which are most sensitive to the economic recovery.
Nomura cut the weight of financials and cement shares in its model portfolio, while Jefferies downgraded Indian banks to underweight from overweight.
Not everyone is pessimistic. India’s long- term outlook remains strong and any decline in equities due to infections should be used as an entry point by investors, according to Prabhudas Lilladher Ltd.
India’s gross domestic product is forecast to grow by as much as 12.5% this fiscal year, which would make it the world’s fastest-growing major economy.
Bonds held on to last week’s gains, with the yield on the benchmark 10-year notes near the lowest since mid-February, amid optimism the central bank may keep its policy accommodative for long to support the economy.
“We expect the rupee to weaken versus the USD as have other EM currencies,” and given the slow progress of vaccination, the economy “will be slower to recover,” R Venkataraman, managing director at IIFL Securities, wrote in a note.