It is important to appreciate the fact that this bad news will not impact the earnings of companies in sectors that are doing well like IT, metals and pharma. FIIs continuing their selling spree is a worry for the market in the short run, said an analyst.
“There is a portfolio churn away from banks in favour of IT, metals and pharma. If this persists, it will present buying opportunities in the leading private sector banks. Since equity investors are sitting on big profits, partial profit booking and moving money to fixed income may be considered even though fixed income returns are low. Heightened uncertainty warrants partial switching to fixed income,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
How are the blue chip stocks doing?
After opening in the red, benchmark indices plunged further. At 9:42 am, BSE flagship Sensex was down 279 points or 0.58 per cent at 47,802. NSE benchmark Nifty followed, dropping 67 points or 0.46 per cent to 14,339.
In the 50-share pack Nifty, Power Grid was the biggest gainer, up 4.42 per cent. SBi Life Insurance, Tata Steel, Asian Paints, Hindalco, Divi’s Laboratories and Tata Consumer were among other gainers.
ICICI Bank was the top loser in the pack, down 1.85 per cent. HUL, HDFC, HDFC Bank, Bajaj Finance, M&M, SBI, L&T, Shree Cement and Britannia Industries were other losers in the pack.
FACTORS DRIVING MARKETS
Good news
- Yields, dollar fall: The dollar index edged 0.1 per cent lower against its rivals. The 10-year US Treasury yield ticked lower. A fall in both indicators bodes well for emerging market equities.
- ECB maintains status quo: The ECB’s decision to leave policy on hold came despite its prediction of a strong rebound in the euro zone economy from mid-year as Covid-19 infections are brought under control.
Bad news
- Covid rampage: India added more than 3.3 lakh cases on Thursday, the second consecutive day it added over three lakh new cases and a new record for any country anywhere in the world. No country had so far added these many cases for two consecutive days.
- Wealth tax in US: In a hit to stock market sentiment overnight, the administration of the US President Joe Biden was reported to be seeking an increase in the capital gains tax to near 40 per cent for wealthy individuals, almost double the current rate.
