Sensex falls 740 points from day\'s high\, ends 81 points lower; banks top drags

Mumbai: Benchmark equity indices wiped off early gains on Monday, mirroring losses in European markets, and as investors feared a faster spread in new coronavirus cases with the infections already past the 67,000-mark in India.. The underlying tone of the market is likely to continue to be weak, as investors closely track the spread of Covid-19 infections.

After having risen as much as 659 points in early trade, Sensex erased all the gains to close 81 points lower, dragged down by losses in financial stocks. Private lenders ICICI Bank, HDFC Bank and mortgage lender Housing Development Finance Corporation (HDFC) contributed the most to the benchmark’s losses.

Shares of ICICI Bank dropped 5.23 per cent, after India’s second-largest private lender by assets, missed Street forecasts and posted a 26.03 per cent year-on-year (YoY) rise in standalone profit. Rivals HDFC Bank and HDFC shed 1.40 per cent and 1.82 per cent, respectively.

“The negative impact was mainly due to financials, led by ICICI Bank, which missed earnings estimates. This closing was in spite of gains in Reliance, autos and IT,” said Vinod Nair, Head of Research at Geojit Financial Services

“Globally, with countries talking about emerging from lockdown measures, there were also warnings of resurgence in infections. This has added to the uncertainty in the markets, with the number of infections in India continuing to rise," he added.

Energy-to-telecom conglomerate Reliance Industries (RIL) limited the losses for the index. The stock rose as much as 3.40 per cent in early trade to 1,614.85, close to its 52-week high mark. It later pared most of the gains and closed 0.96 per cent higher at Rs 1,576.75. The stock reclaimed the Rs 10 lakh crore market capitalization-mark but closed shy of it.

The Mukesh-Ambani controlled company said over the weekend, it has fixed May 14 as the record date for the Rs 53,100 crore 1:15 rights issue, which is priced at Rs 1,257 per share.

Key highlights

• The 30-share Sensex dropped 0.26 per cent or 81 points to close at 31,561, while the 50-share Nifty slipped 0.13 per cent or 12 points to close at 9,239.

• Earlier in the day, Sensex rose as much as 2.08 per cent or 659 points to 32,302 points while Nifty gained 2.04 per cent or 188 points to 9,440.

• Market breadth tilted towards the sellers, with losers outpacing gainers in the ratio of 1.2:1 on BSE.

• A total of 16 of 30 Sensex stocks closed lower. ICICI Bank, Kotak Bank, HUL and HDFC were the biggest losers. Hero MotoCorp, Bajaj Auto, Maruti, TCS and HCL Tech were the biggest gainers, adding up to 6.29 per cent.

• BSE Auto index bucked the trend and rose 4.23 per cent, with all components closing in the green on hopes that people will prefer private vehicles to public transportation system in the wake of Covid-19 pandemic. Auto majors Hero MotoCorp and Tata Motors zoomed 6.29 per cent and 6.23 per cent.

• The broader market outperformed benchmark with BSE Midcap index rising 0.65 per cent while the BSE Smallcap index fell marginally by 0.10 per cent.

What drove the markets lower?

• Losses in financial stocks

Financials stocks drove the market lower after ICICI Bank missed street estimates at March quarter earnings. Banking stocks have remained volatile in recent weeks, and the sector is projected to suffer a fresh bout of bad debt as businesses default in the wake of the COVID-19 pandemic, Reuters reported.

• Fresh rise in Covid numbers

The total number of coronavirus cases in India today rose to 67,152 after a record 4,213 fresh infections and 97 deaths were reported in past 24 hours. The death toll due to coronavirus-related complications went up to 2,206. Wuhan, the epicentre of the novel coronavirus outbreak in China, reported on Monday its first cluster of infections since a lockdown on the city was lifted a month ago, stoking concerns of a wider resurgence of the disease.

• Mixed global market cues

Global stocks were mixed. European stocks gave up early gains on Monday, with travel and oil stocks taking a hit even as several countries emerged from coronavirus-driven lockdowns. On the other hand, Asian shares followed Wall Street higher. The pan-European STOXX 600 shed 0.25 per cent, easing from a near 1 per cent gain at the open, while MSCI’s broadest index of Asia-Pacific shares outside Japan firmed 0.86 per cent.

Who moved my market?

• So far this month, foreign institutional investors (FIIs) have bought a net of Rs 15,864.55 crore of Indian shares, while mutual funds have sold a net of Rs 2,597.78 crore of the asset class.

What to watch out for?

• The speed and extent of the spread of coronavirus infections in the country will be closely monitored, after the record spike in last one day.

• The outcome of a meet between Prime Minister Narendra Modi and Chief Ministers of States, that is currently underway, is also awaited as it holds cues to the easing of lockdown measures in the country.

• The second stimulus package from the government to help companies tide over the coronavirus crisis is keenly awaited and expected to arrive this week.