Investors lose over Rs 3.5 lakh cr on Sensex crash; is deeper correction coming?

Record surge in coronavirus cases dragged the market down by more than 1.5% today despite positive global markets. The fallout of the second and more lethal wave of Covid-19 has hit the bulls on Dalal Street and the consequent lockdowns on the economy dented the sentiments and investors have lost over 3.5 lakh crore rupees in just a single day of trade.

The market capitalisation of BSE listed company’s fell Rs 3,53,420 crore to Rs 2,01,77,325 crore on April 19.

At close, the Sensex was down 882.61 points, or 1.8%, at 47949, and the Nifty was down 258 points, or 1.77%, at 14,359. However, buying at lower levels in the pharma and IT space lifted Sensex and Nifty nearly 600 points and 170 points off lows.

Among broader market indices, BSE Midcap and Smallcap indices shed 1.5-2%.

Banking stocks were among the major drags for most of the day’s trade but recouped some losses during the closing hour today. The Nifty PSU Bank shed more than 4%, while auto, infra, metal and energy indices slipped 1-2%.  Nifty Pharma index was the only index that ended in thee green, up 0.17%

Britannia, Dr Reddy’s Labs, Infosys, Wipro, and Cipla were the only gainers on the Nifty index, up between 0.6% and 1.5%. On the downside, Adani Ports, Power Grid, ONGC, Hero MotoCorp, IndusInd Bank, Bajaj Finserv, Kotak Mahindra Bank, and HDFC Life were the top drags, down up to 4%.

Vinod Nair, Head of Research at Geojit Financial Services said, “Domestic markets nosedived as surging Covid cases and the imposition of restrictions. The market will continue to ride on volatility. We can expect stability as daily cases fall in the coming weeks due to lockdown, completion of state elections and immunity with vaccination.”

Here’s what experts say investors must do on April 20

Rohit Singre, Senior Technical Analyst at LKP Securities

Index opened the day with strong cuts but in the second half showed decent pullback & closed a day at 14,365 with loss of nearly two per cent. The index has formed a hammer candle pattern on the daily chart which hints if current levels are held we may see some positive reversal in coming sessions, a strong base is still at 14,250-14,200 zone if managed to hold then good recovery possible towards immediate hurdle zone of 14450-14550 zone.

Naveen Kulkarni, CIO, Axis Securities

The economic impact of the current rise in covid cases will be significant in the short term as it will lead to lockdowns across many states in the country. However, the demand is never fully destroyed, and will come back.

For many industries like travel, tourism, restaurants and hotels the impact will be significant. IT, Pharma, Metals, Telecom and Consumer staples will be less impacted and provide support. Discretionary consumption will be the most impacted sector and will see challenges.