Markets tank on rapid rise in virus, more states impose lockdown

Domestic institutional investors were net buyers of ₹1,465.31 crore worth shares in April.Premium
Domestic institutional investors were net buyers of ₹1,465.31 crore worth shares in April.
 3 min read . Updated: 19 Apr 2021, 07:41 PM IST Nasrin Sultana

As more states imposed curfews to curb rapid spread of covid cases in India, markets tanked on Monday. The Sensex lost nearly 1469.32 or 3% during the day. The 30-share index ended 882.61 or 1.81% lower at 47,949.42. The Nifty also slipped 258.40 or 1.77% closing at 14,359.45.

Equities in other Asia-Pacific regions mostly rose while India markets lagged due to higher infections in the country. Among the region’s major markets, mainland Chinese stocks led gains with the Shanghai composite up 1.49%.

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“Worsening of the pandemic situation and the consequent lockdowns by various state governments is creating uncertainties about the pace of economic growth from here. No wonder, Indian equities witnessed intense selling pressure and is distinctly underperforming the other comparable equity markets in Asia," Gaurav Dua, SVP, Head - Capital Market Strategy, Sharekhan by BNP Paribas said.

He added that though the March result season has started on a positive note but the near term outlook would remain clouded and keep markets volatile.

Currently, India has the second highest number of covid cases globally, behind only the US with economists downgrading their economic growth forecast for India in FY22 as states are getting into a lockdown mode.

The Delhi government will impose a six-day curfew in the national capital from 10pm tonight till 5am on April 26 to curb the spread of Covid-19 as the city reported around 23,500 fresh cases in the last 24 hours, chief minister Arvind Kejriwal said on Monday. The chief minister said Delhi’s health infrastructure has been pushed to its limit and a lockdown at this time is required not just to break the chain of the fast spreading infection, but also to augment health infrastructure on a large scale including beds, oxygen supply and life saving drugs.

“We grow even more concerned that rising covid 19 cases pose a risk to our still shallow recovery. Covid 19 cases have jumped 7 times a day from a month ago. It remains to be seen if the cases subside with the state-level lockdowns that we are seeing. Our base case sees real GVA rebound to 9% in FY22 from a contraction of 6.4% in FY21," Indranil Sen Gupta and Aastha Gudwani, economists, BofA Securities.

According to their estimates a national lockdown - if finally needed - would pose a 300 basis points risk, a month of national lockdown costs 100-200 bps of annual gross domestic product (GDP). However, they feel that the normal rain forecast this year is a relief.

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Meanwhile, India VIX or India volatility index jumped 10.20% to end at 22.49 indication anxiety and fear among investors. Foreign institutional investors (FIIs) continued to dump Indian equities in April. They were net sellers of Indian shares worth $395.27 million in this month so far. Domestic institutional investors, were, however net buyers of ₹1,465.31 crore worth shares in April.

The Indian rupee weakened by 0.70% to end 74.88 per dollar. “The rising cases of covid have soured sentiments in rupee. The result of which has been a broad-based depreciation in the Indian Rupee. The RBI is expected to be active and may intervene aggressively to curb volatility. Over the near term, we expect a range of 74 and 75.50," Anindya Banerjee, DVP, Currency Derivatives and Interest Rate Derivatives at Kotak Securities said.

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