Indian markets seemingly set aside the economic implications of the extended lockdown, although it lost ground on the negative opening in the European markets.
After opening stronger on the back of positive global cues, domestic equity market benchmarks Sensex and Nifty failed to hold on gains in Wednesday’s trade. S&P BSE Sensex ended 310 points or 1.01 per cent down at 30,380, while the broader Nifty 50 index settled at 8,925. “Indian markets seemingly set aside the economic implications of the extended lockdown, although it lost ground on the negative opening in the European markets. With the earnings season starting, management commentary, on the impact of Covid-19 on their respective businesses, will be in focus,” Vinod Nair, Head of Research at Geojit Financial Services, said.
Out of 30 Sensex stocks that constitute S&P BSE Sensex, 18 stocks finished trade in red with Kotak Mahindra Bank as top loser, down 6.23 per cent, followed by Hero MotoCorp, Bajaj Finance, HDFC and HDFC Bank. On the other hand, Hindustan Unilever was the top Sensex gainer with a growth of 6 per cent. HCL Tech, ITC and Nestle India were among the other gainers on the index. Nifty sectoral indices traded mixed today, with Nifty FMCG index as the top gainer, up 4.13 per cent led by gains in HUL, Britannia, Dabur and ITC. While Nifty Bank, Nifty Financial Services, Nifty Private Bank indices finished over 2 per cent lower.
What led to last hour sell-off in Sensex, Nifty?
- During the intraday trade Sensex fell over 1,300 from day’s high while Nifty slipped below 8,900-mark. “Market was already factoring a good monsoon where we saw a good rally in consumption and rural related stocks in the morning, but the market fell sharply post IMD press conference on the back of pressure in dow futures. After the 9100 level, 9300-9400 was a supply zone where bears again came back aggressively,” Amit Gupta, Cofounder, Tradingbells told Financial Express Online. The fall in the markets was dragged by index heavyweights such as HDFC Bank, RIL, HDFC, Kotak Mahindra Bank and TCS, while financials were the key losers in terms of sector. This sector, in particular, was “affected negatively due to lockdown extension as there is a fear of rise in NPA,” Gupta added.
- After witnessing a fall from highs of about 12,500 for Nifty to levels of about 7500, the markets have as usual shown good pullback from lows, says Narendra Solanki, Head Fundamental Research, Anand Rathi Shares and Stock Brokers told Financial Express Online. “However markets at current levels of about 9200-9500 is decent for the time being as it gets fairly valued. Keeping in mind future cut in earnings outlook for FY21 and pace of broad recovery, we have seen sell-off resuming at these levels,” Solanki said.
- The sudden fall in the markets was led by profit booking. Those holding long since 8000 level, booked profit, says Vishal Wagh, Research Head, Bonanza Portfolio Ltd. “As lockdown has also extended to May 3, 2020, there is bad news from crude also, where crude oil futures plunged on low demand. Dow futures has also corrected by 450 points,” Wagh further added.
What to expect next?
“Almost all sectors have been affected by the lockdown and the market will try to measure the future financial impact of this, rather than focusing on the previous quarter numbers. This is expected to drive stock-specific moves in the market in the coming days. IT companies will officially kick off the earnings season and investors will be keen on how the virus spread has impacted their services and the locations in which those services are offered,” Nair said.