6 Reasons Why Sensex Plunged 883 Points Today

Mon, 19 Apr Closing | Yash Vora, TM Team

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Indian share markets nosedived and registered sharp losses in today's volatile session following a strong second wave of Covid-19 in the country and announcement of stricter lockdowns, hampering the economic recovery.

At the closing bell, the BSE Sensex stood lower by 883 points (down 1.8%).

Meanwhile, the NSE Nifty ended down by 258 points (down 1.8%).

Dr Reddy's Lab and Infosys were among the top gainers today.

IndusInd Bank and Power Grid, on the other hand, were among the top losers today.

SGX Nifty was trading at 14,384, down by 240 points, at the time of writing.

The BSE Mid cap index and the BSE Small cap index ended down by 1.9% and 1.6%, respectively.

On the sectoral front, capital goods stocks, banking stocks and realty stocks were among the hardest hit.

Asian share markets ended on a positive note today, helped by expectations monetary policy will remain accommodative while Covid-19 vaccine rollouts helped ease fears of another dangerous wave of coronavirus infections.

The Shanghai Composite and the Hang Seng ended higher by 1.5% and 0.4%, respectively. The Nikkei ended on a flat note.

US stock futures are trading lower today with Dow Futures trading down by 83 points.

The rupee is trading at 74.87 against the US$.

Gold prices for the latest contract on MCX are trading up by 0.9% at Rs 47,793 per 10 grams.

Here are Top 6 Factors Why Indian Stock Markets Crashed Today

Spike in Covid-19 Cases: A sharp rise in Covid-19 cases are posing a serious threat to the economic recovery of the world. India has reported 2.7 lakh fresh Covid-19 cases in the last 24 hours - the biggest spike in daily cases witnessed since the pandemic began last year.

The Union Health Ministry said that the daily coronavirus positivity rate in India has doubled to 16.7% in the last 12 days.

Lockdown Fears: One of the key reasons behind today's weakness is the strict lockdown-like restrictions imposed in Maharashtra, home to financial hub which contributes 14.5% of the country's overall GDP.

While strict lockdown-like restrictions have been imposed in Maharashtra, experts have called for a 15-day self-imposed lockdown in Gujarat. The Rajasthan government has ordered the closure of offices and markets from Monday to May 3.

Lockdown was also announced in Delhi. Announcing a six-day lockdown in Delhi from 10 pm tonight to 5 am next Monday, Chief Minister Arvind Kejriwal said the move was necessary as rising Covid cases had severely strained the city's resources and its health system was at a tipping point.

Earnings Growth: The second wave of Covid-19 in India has cast a cloud over economic growth and earnings outlook going ahead, worrying investors.

The trend was visible in shares of IT companies, which kicked off the earnings seasons last week. The shares of IT firms fared poorly on bourses after the Q4 performance. TCS and Infosys fell short of market expectations.

Gross Domestic Product (GDP) downgrades: As a resurgence in Covid cases poses risks to India's fragile economic recovery, it has forced leading brokerages to downgrade India's GDP growth projections for the current fiscal year to as low as 10%, dampening market sentiment.

While Nomura has downgraded projections of economic growth for the fiscal year ending March 2022 to 12.6% from 13.5% earlier, JP Morgan now projects GDP growth at 11% from 13% earlier.

Foreign Portfolio Investors (FPI) Outflows: The above mentioned concerns were also visible among FPIs who have pulled out a net Rs 46.4 billion from Indian markets in April so far.

Profit Booking: Apart from the above, losses were also seen as share market succumbed to profit-booking after a steady rise witnessed for the stock markets lately.

Most of the profit-booking was seen in the banking sector today with stocks such as IndusInd Bank, SBI, Kotak Bank and Axis Bank dragged the benchmark indices lower.

We will keep you updated on how these factors develop in the coming days and what effect they have on Indian stock markets. Stay tuned!

Speaking of stock markets, in the latest Momentum Moves video, Brijesh Bhatia talks about how the Nifty 50 index can hit 16,000.

Nifty has reversed from multiple support zones of rising trendline, 21 WEMA and 61.8% Fibonacci retracement level.

As per Brijesh, the hurdle of gap area at 14,652-14,785 needs to be crossed by the bulls in the coming weeks to confirm the bullish trend and catch-up with global equity indices.

In the video, Brijesh also talks about the Financial Services index. The Financial Services Index has been underperforming Nifty for last couple of months, but Brijesh believes it is at an excellent bargain buying levels.

Tune in to the video below to find out more:

Also talking about the stock markets and the ongoing volatility in Indian stocks, have a look at the two charts below, in the order they have been placed:

Near Term Volatility in Sensex Compensated by Long Term Gains

The year-on-year change in the Sensex was hardly predictable but someone who stayed invested multiplied every lakh nearly 14 times.

As per Co-head of Research at Equitymaster, Tanushree Banerjee, 2021 could be one of the best years for individual investors.

In one of her videos, Tanushree discusses the best safe assets for 2021. You can watch the video here: Safest Assets in 2021 are Not What You Think...

In news from realty sector...

Macrotech Developers was among the top buzzing stocks today.

EXPIRES at 11:59pm: Full Transcript of Our Urgent Broadcast on India's Revival

Macrotech Developers (Lodha) shares list at 10% discount to issue price

Macrotech Developers made a weak debut today, as the scrip got listed at Rs 439 per share on BSE, a 9.7% discount to its issue price of Rs 486 per share.

According to a leading financial daily, the ongoing spike in Covid-19 cases and the recent decision by the Maharashtra government to discontinue a stamp duty waiver on property registrations hurt Macrotech's listing prospects.

The Rs 25 billion initial public offering (IPO) of the Mumbai-based real estate developer received bids for 70.4 million equity shares against an offer of 51.4 million. Demand from qualified institutional buyers (QIB) and non-institutional investors helped the maiden offer subscribe 1.4 times, the least so far in 2021.

The portion reserved for retail investors was subscribed 0.4 times, while that of QIBs 3.1 times. Non-institutional investors bid 1.5 times for the shares on offer and the employees' portion was booked 0.8 times.

Before the IPO, the company had raised Rs 7.4 billion from 14 anchor investors, allocating 15.2 million shares at Rs 486 apiece.

Of the proceeds from the IPO, the company plans to repay debt worth Rs 15 billion and acquire land and development rights worth Rs 3.8 billion, while deploying the rest for general corporate purposes.

Note that Macrotech has a market share of more than 10% in the micro markets of Mumbai Metropolitan Region (MMR).

The residential real estate developer focuses on affordable and mid-income housing. It also develops commercial real estate as part of mixed-use developments in and around its core residential projects.

Macrotech Developers share price ended the day down by 6.5% on the BSE.

Moving on to news from the metal sector...

Tata Steel, Jindal Steel, Arcelor Mittal Nippon Steel, SAIL announce the supply of liquid oxygen from their plants for Covid-19 patients

After Reliance Industries led by Mukesh Ambani provided oxygen for free to Maharashtra, several Indian business houses have come forward to divert oxygen for their plants for medical use.

On Sunday, Tata Steel announced that they are providing oxygen for the treatment of Covid-19 patients.

Before Tata Steel other steel companies like Jindal Steel, ArcelorMittal Nippon Steel and SAIL had also announced that they are supplying oxygen for medical use.

Liquid medical oxygen or LMO is a crucial medical requirement for the treatment of coronavirus patients.

Commenting on the aid provided by Tata Steel, a company spokesperson assured, 'Tata Steel's response has been proactive to the increased demand for liquid medical oxygen and the company has been supplying as per the requirement given by various state governments'.

SAIL said it has also supplied over 33,300 tonne of LMO for the treatment of coronavirus-affected patients.

We will keep you posted on all the news from this space. Stay tuned!

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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