Stock markets on Thursday reeled under heavy selling pressure. While the economic package announced by the government failed to boost market sentiment, rising Covid-19 cases in the country and weak global cues after US Federal Reserve chief Jerome Powell warned of a “highly uncertain” near-term outlook for the United States, added to the weakness.
Markets also took a knock after the World Health Organization (WHO) warned that the coronavirus “may never go away”.
The BSE Sensex, which tanked as much as 956 points at one stage, closed down by 886 points, or 2.77 per cent, at 31,122.89, while the Nifty Index fell 241 points to 9,142.75.
On the sectoral front, barring FMCG and pharma, all other indices ended in the negative territory.
The rupee also declined 10 paise to close at 75.56 against the US dollar amid a strengthening greenback and weak domestic equities.
Markets witnessed a gap-down opening, tracking weak cues from the both domestic and global fronts.
“The rise in COVID-19 cases and lack of clarity over the impact of stimulus packages weighed on the sentiment. Besides, weakness in the global markets further dented the sentiment. The Nifty index shed nearly 2.5 per cent and we had a similar trend on the sectoral front most indices ended in the red,” said Ajit Mishra, VP – Research, Religare Broking.
S Ranganathan, Head of Research at LKP Securities, said, “Markets traded weak throughout the day with IT stocks dragging Indices as Gartner predicts IT spend to decline 8%. Automobile stocks led by Maruti staged a smart recovery even as Reliance dragged.” RIL shares fell 4 per cent to Rs 1,435.45 on the BSE.
Eye on further announcements, global cues
Markets will react to the Finance Minister’s announcements in the following sessions. Besides, the guidelines for the next phase of lockdown will also be on their radar. At the same time, global markets are also not showing any sign of stability yet. The prevailing volatility is unlikely to subside any time soon.
Analysts said the focus would remain on the FM’s announcements over the next few days as the Finance Minister will be sharing further details on other beneficiaries of the stimulus package.
“Markets will react to those announcements in the following sessions. Besides, the guidelines for the next phase of lockdown will also be on their radar.
“At the same time, global markets are also not showing any sign of stability yet. In short, we do not expect the prevailing volatility to subside any time soon thus traders should plan their positions accordingly and focus more on money management aspects,” Mishra said.
According to analysts, the stimulus package announced by Finance Minister Nirmala Sitharaman on Wednesday was more of leveraging on existing institutions and postponement of activities such as tax deducted at source instead of fresh infusion of cash.
A section of the market said the announcements were short of expectations.
Markets were expecting a fresh infusion of liquidity which could have been in the form of external borrowings, using forex reserves or the Reserve Bank of India’s balance sheet, among others.
But the government did not announce any such things. Moreover, public sector units such as REC and PFC will have to mobilise Rs 90,000 crore for the stressed power distributions companies.
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