Markets tumbled overt 2.5 per cent on the back of weak global cues, fears of a global resurgence of the virus and receding hopes of a US stimulus.
The sell-off was primarily seen after European stock markets opened with sharp downticks.
Indian share market benchmarks, BSE Sensex and Nifty 50 witnessed a sharp sell-off in the afternoon deals, erasing the gains made since October 7, 2020. With this, headline indices snapped their 10-day rally, halting the longest daily-winning streak in over a decade. As bears came haunting Dalal Street, BSE Sensex tumbled 1,380.58 points from day’s high and hit a day’s low of 39,667.47. During the intraday deals, Nifty 50 plummeted 364 points to hit day’s low of 11,661.30. At close, S&P BSE Sensex ended 1,066 points, or 2.61 per cent lower at 39,728.41 while the Nifty 50 index settled at 11,680.35, down 291 points, or 2.43 per cent.
The sell-off was primarily seen after European stock markets opened with sharp downticks. “The selling was largely on account of negative news coming from European markets as stimulus hopes fade and rising incidence of Covid-19 cases leading to fresh rounds of the lockdown being implemented in some cities,” Narendra Solanki, Head of Research at Anand Rathi Shares and Stock Brokers, told Financial Express Online.
In European stock market, the pan-European Stoxx 600 dropped 2.45 per cent, DAX fell 3.21 per cent and FTSE lost 2.46 per cent. While Dow Jones Industrial Average futures were down 292 points. S&P 500 futures and Nasdaq 100 futures were also trading in the negative territory.
Support to India growth from recent stimulus will be minimal
Solanki further added saying that traders seemed to take note of Covid-19 cases and booked profits in anticipation of fresh rounds of the lockdown being implemented which could further delay already weak economic recovery. Moody’s Investor Service said that the recent Rs 46,700 crore (about 0.2 per cent of GDP) stimulus will provide limited support to growth. “Even when combined with the government’s fiscal stimulus earlier in 2020, the size of the measures remains modest,” it added. It predicted growth to rebound to 10.6 per cent in fiscal 2021, reflecting the comparison with the low GDP levels of 2020 as economic activity gradually normalises.
Index heavyweights such as Reliance Industries Ltd, HDFC Bank and Infosys contributed the most to the indices’ loss today. “Markets tumbled overt 2.5 per cent on the back of weak global cues, fears of a global resurgence of the virus, receding hopes of a US stimulus ahead of elections along with profit booking at higher levels,” Aamar Deo Singh, Head Advisory at Angel Broking, told Financial Express Online.