Amid the ongoing health crisis the country is going through, localised lockdowns and restrictions on economic activity warrant a market correction. The targets of around 11 per cent GDP growth and above 30 per cent earnings growth for FY22 that the market had assumed before the second wave of Covid-19 struck the country are likely to be missed, said an analyst.
“The steady rise in test positivity cases and the steady decline in recovery rates are areas of serious concern. But this negativity need not reflect fully in the market since the global clues are positive. The sharp recovery in global growth led by the US and China augurs well for markets globally. Bulls would be reluctant to go long; bears would hesitate to go short massively. Time to wait and watch,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Fear gauge India VIX surged 10.41 per cent to 22.52 as traders grew nervous. The market capitalisation of BSE-listed companies dropped below Rs 200 lakh crore during the session.
FACTORS HURTING MARKET
Good news
- Yields fall: The dollar index was languishing near a one-month low against its rivals. Benchmark US 10-year Treasury yields edged lower towards multi-week lows hit last week.
- ECB meeting: The European Central Bank (ECB) meets on Thursday. No changes to rates or guidance are expected while preliminary data on factory activity around the globe for April is due on Friday.
Bad news
- Covid rampage: India registered 2,61,500 new cases in the last 24 hours, taking the total caseload to 1,47,88,109. The Union Health Ministry said that the daily coronavirus positivity rate in India has doubled to 16.69 per cent in the last 12 days.
- Lockdown: While strict lockdown-like restrictions have been imposed in Maharashtra, experts have called for a 15-day self-imposed lockdown in Gujarat. The Rajasthan government has ordered the closure of offices and markets from Monday to May 3.
How are the blue chip stocks doing?
After opening in the red, benchmark indices plunged further. At 9:40 am, BSE flagship Sensex was down 1,397 points or 2.86 per cent at 47,435. NSE benchmark Nifty followed, shedding 408 points or 2.79 per cent to 14,210.
In the 50-share pack Nifty, Dr Reddy’s Laboratories was the biggest gainer, up 0.96 per cent. Cipla and Divi’s Laboratories were among other gainers.
ICICI Bank was the top loser in the pack, down 5.23 per cent. IndusInd Bank, Axis Bank, SBI, Adani Ports, Bajaj Auto, Bajaj Finance, HDFC and Kotak Mahindra Bank were other losers in the pack.
Broader markets
Broader market indices traded with cuts deeper than their headline peers in morning trade. Nifty Smallcap was down 3.06 per cent while Nifty Midcap declined 3.13 per cent. The broadest index on NSE — the Nifty 500 — was down 2.58 per cent.
Syngene, Cummins India, Dr Lal Pathlabs, Linde India, Future Retail and Thyrocare Technologies were gainers from the space while HEG, Bajaj Electricals, Hindustan Copper, AU Small Finance Bank, RBL Bank and Adani Total Gas were under selling pressure.
Global markets
MSCI’s broadest index of Asia-Pacific shares outside Japan was last at 695.59, within striking distance of Friday’s high of 696.48 – a level not seen since April 7.
Australian shares were 0.25 per cent higher while New Zealand’s benchmark index and South Korea’s KOSPI added 0.4 per cent each. Japan’s Nikkei eased 0.4 per cent.
On Friday, the S&P 500 gained 0.4 per cent to close at a new record high while clocking its sixth straight weekly gain. The Dow finished 0.5 per cent, also at a record high while the Nasdaq climbed 0.1 per cent. E-mini futures for the S&P 500 were down 0.3 per cent in early Asian trading.
