Sensex tanks 883 pts as rising Covid cases spooks market; Nifty below 14,400

After crashing over 1,469 points in early trade, the 30-share BSE index pared some initial losses

The Indian equity markets began the week in the red. The benchmark indices ended Monday’s trading nearly 2% lower on concerns over the economic fallout of the rising Covid-19 cases and stricter restrictions in various states.

The Sensex ended at 47,949.42 which is 882.61 points below and the Nifty ended at 14,359.45 which is 285.40 points below. During the intra-day trade, Sensex witnessed a 1,469-point crash.

Among the BSE Sensex stocks, all except Dr Reddy’s Laboratories and Infosys were in the red. While Dr Reddy’s Laboratories gained 1.58% to end the day at Rs 4,970.55 per share, Infosys gained 0.74% to end the day at Rs 1362.60. Most Nifty 50 stocks also ended in the red.

Analysts blame the rise in Covid-19 cases for the low market sentiment. They feel this slow momentum will continue. These analysts note that it is because of this sentiment that foreign institutional investors and portfolio investors are pulling out. After witnessing a massive inflow of foreign funds in the financial year 2020-21 through institutional and portfolio investors, the new financial year has seen an outflow of FIIs and FPIs. In April 2021, there has been an outflow of Rs 3,766 crore in FPIs and FIIs according to the National Securities Depository Limited (NSDL).

“There is no respite for the Indian markets and they continued to grapple in deep red in afternoon session ignoring the positive cues from the global bourses, as India continued to report a record spike in daily Covid-19 cases”, says Narendra Solanki, Head- Equity Research (Fundamental), Anand Rathi Shares & Stock Brokers.

“Sentiments were fragile as Foreign Portfolio Investors (FPIs) have pulled out in April so far amid a sharp escalation in Covid-19 cases, unnerving overseas investors.” Analysts say that the only sign of relief at this point is the government’s efforts to provide vaccination and not impose a national lockdown. “Current level of mobility restrictions imposed in different states and government’s focus to improve the supply of vaccine in the country should be helpful to contain an outbreak in coming weeks and essentially should not lead to large economic damage,” says Binod Modi, Head Strategy at Reliance Securities.

The rupee also depreciated 53 paise to close at 74.88 to a dollar.

“Rise in Covid-19 cases and the pandemic not being under control is weighing on the price. While this depreciation is due to Covid-19, economic data is also negative with high inflation, etc which shows that we will take time to heal,” says Kaynat Chainwala - Fundamental Research Analyst Currencies, Anand Rathi Shares and Stock Brokers.