Covid fears: Markets plummet tracking global peers

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Published: June 16, 2020 7:14 AM

The monthly inflows by foreign portfolio investors remai positive at $2.9 billion in total. Indian shares recovered slightly in line with the Dow Jones Mini futures and the European markets.

Indian equity markets, Covid-19 cases, global stock markets, Nifty, Reliance Industries, Quantum Mutual Fund, FPI holdings, Asian marketsAccording to Jefferies, fears of a re-lockdown have emerged due to the spike in Covid-19 cases.

The Indian equity markets on Monday started on a weak note in line with the global stock markets as fears of a second wave of Covid-19 cases across China and the US continue to worry investors.

The 30-share Sensex was down by 552.09 points or 1.63% to close at 33,228.8 and the 50-share index Nifty was down by 159.2 points or 1.6% to close at 9813.7.

The Nifty was down 193 points intraday trade but ended the session a little bit off the day’s lows as the markets were helped by the gains in heavyweight Reliance Industries (RIL), which touched yet another 52-week high after it announced two more deals for its telecom arm Jio over the weekend.

The monthly inflows by foreign portfolio investors remai positive at $2.9 billion in total. Indian shares recovered slightly in line with the Dow Jones Mini futures and the European markets.

According to a report by Motilal Oswal Institutional Equities, the value of FPI holdings in the Indian markets has decreased in line with the market correction. “Peak market value of FPI holdings stood at $473 billion in calendar year 2019. Since then, the correction in the markets, especially in the broader markets, has resulted in depletion of $ 112 billion in the overall market value of FPI holdings in India,” the brokerage said in its report.

Sorbh Gupta, associate fund manager, Quantum Mutual Fund, said, “Currently no one knows how the second wave of Covid-19 will impact the economy and whether there will be another shutdown. If the government goes for another shutdown then it will have adverse effects on the economy and it will eventually get reflected in the markets.”

In Europe, stock markets in France, UK and Germany fell between 1% and 1.16%. The Dow Jones Mini futures were down by 649 points at the time of press. Asian markets too, witnessed a selloff on Monday, with bourses in China, Taiwan and Hong Kong down between 1.02% to 2.16%. South Korea’s Kospi was down by 4.76% during the day’s trading session. Globally markets fell after China reported a rise in novel Coronavirus cases after announcing 49 new cases in Beijing. The country had passed 55 days where new infections were reported only from returnee nationals and not resident nationals. Japan and the US, too, saw new cases rise. This sent investors all over the world in a risk-off mood as they started dumping risky assets such as equities.

According to Jefferies, fears of a re-lockdown have emerged due to the spike in Covid-19 cases. “Partial re-lockdown fears have risen as Covid-19 cases have spiked, although governments may choose livelihood as fatality rate remains low,” said Jefferies in its report. According to the brokerage, the economic activity in India which was seen in May when the economy was partially opened up has been maintained.

The biggest losers on the Nifty were IndusInd Bank, Axis Bank, Tata Motors, Bajaj Finance and ICICI Bank down by 7.2%, 4.49%, 4.42%, 3.93% and 3.79%.

The biggest gainers on the other hand were GAIL, Wipro, HCL Technologies, RIL and Sun Pharmaceuticals up by 3.68%, 2.6%, 1.49%, 1.68% and 0.8%.

Among the broader indices, Nifty Midcap and Nifty Smallcap outperformed the benchmarks with Nifty Midcap down by 1.12% and Nifty Smallcap up by 0.37%, respectively. Sectorally, the losers were Nifty Private Bank, Nifty Bank, Nifty Realty, Nifty Financial Service and Nifty Auto. The only sectoral gainers were Nifty PSU Bank, Nifty Media and Nifty Pharma.

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