Updated: April 13, 2021 4:54:46 am
With India reporting a surge in Covid-19 infections and states, led by Maharashtra, imposing curbs to tackle the pandemic, stock markets plunged 3.44 per cent on Monday amid fears that the second Covid wave will impact the recovery in the economy. The benchmark Sensex plummeted by 1,708 points to 47,883.38 on and the NSE Nifty fell 524 points to 14,310.80 in the sell-off.
The rupee fell below the 75 mark against US dollar and settled 32 paise lower at 75.05, as India became the second most affected country by the pandemic and foreign investors pulled out Rs 1,746 crore from markets on Monday.
Analysts said the economy could possibly take another beating if Covid cases surge further and states impose more restrictions.
Since the second wave of the pandemic is turning out to be worse than expected, there is profound uncertainty about its impact on the economy and markets.
According to the Health Ministry data, India reported a record 1,68,912 Covid-19 infections overnight, overtaking Brazil to become the second most affected country by Covid-19 after the United States. Maharashtra, which saw a rise of over 63,000 cases and 381 deaths on Monday, is reported to be considering a two-week lockdown and that may have a big impact on the economic activity as the state is a big industrial hub of the country.
On Saturday, the Delhi government announced new restrictions amid an alarming rise in coronavirus cases, banning most public gatherings and setting limits for public transport, attendance at restaurants, theatres, and functions like weddings and funerals.
Stock markets had witnessed a massive sell-off in March and April 2020 when the Covid pandemic first hit the country.
On the BSE, Reliance Industries fell 3.60 per cent to Rs 1,911.30 and HDFC Bank plunged 3.87 per cent to Rs 1,366.60.
The broader markets too were not spared and it ended lower in the range of 4.8-5.3 per cent. On the sectoral front, all indices ended with negative bias with PSU banks, auto and metals remaining the top losers.
“Implications to the banking and discretionary sector are presumed to be the highest, drifting market to defensives like IT, pharma and FMCG. This trend may happen for a couple of trading weeks and down a few weeks, Covid cases are likely to reduce, bringing growth back,” Vinod Nair, head of research at Geojit Financial Services, said.
As markets have come under pressure, investors would be wise to not go for bottom fishing at this time as the weakness may continue till the time a trend of slowdown in the pace of Covid surge is visible. Investors should continue their mutual fund SIP investments and wait for some time before going for direct stock picking as the decline in markets could provide an opportunity of buying good stocks at an attractive price.
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