Sensex ends volatile session below 48,000 on COVID-19 jitters
On a weekly basis Sensex & Nifty lost around 2% each as COVID-19 cases hit record highs
In an extremely volatile session, benchmark Indian equity indices opened weak and rebounded sharply to enter the green terrain in early trade. However, in the afternoon it gave up all its gains and reentered the negative zone as selling pressure mounted but in the late trade, it recouped from day’s low.
On an intraday basis, Sensex yo-yoed between almost 600 points while the Nifty see saw 187 points. At close, Sensex closed 202 points, or 0.42%, lower at 47,878 and the Nifty ended 65 points, or 0.45%, down at 14,341. On a weekly basis Sensex & Nifty lost around 2% each as COVID-19 cases hit record highs, collapse of the healthcare system in the country and stringent curfew levied by most states in the country.
According to Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities, Indian markets succumbed to FPI selling this week on account of the sharp rise in COVID-19 cases. FPIs have remained net sellers this week with the rupee sustaining at 75 levels against the USD.
“As India has become the epicentre of the virus resurgence, there is fear of potential earnings downgrades which could turn out to be higher in case of mid and small caps vis-à-vis the large caps.
“Fresh lockdowns and restrictions being imposed by various state governments will impact demand and also business activity. The persistent rise in hard commodity prices is a threat that could weigh on the margins of many manufacturing companies. Too many potential negatives have come together which could impact markets in the very near future,” he added.
Powergrid, NTPC, IndusInd Bank, Axis Bank and HDFC gained in the range of 0.70-3.5%. On the downside, M&M, Dr Reddy’s, TechMahindra, HUL and Bharti Airtel lost over 1.7% on Friday.
All major sectoral indices ended in the red, Nifty Realty index lost around 1.1% followed by Nifty FMCG, Nifty IT indices tanked over 0.80%. Nifty Pharma and Nifty Auto indices lost around half a per cent in the day. Nifty Bank ended down 0.34%.
The overall market breadth remained in the favour of the bulls, as the broader markets didn’t replicate benchmark indices trend. The S&P BSE MidCap index gained 0.16% today while the S&P BSE SmallCap index was up 0.5%.
Economy:
India Ratings and Research (Ind-Ra) on Friday revised down India’s FY22 real GDP growth forecast to 10.1%, from earlier projection of 10.4%, citing the second wave of COVID-19 infections and slower pace of vaccination. Ind-Ra said the impact of the second wave will not be as disruptive as the first one, despite the daily caseload touching three times of the first wave’s peak, as lockdowns are set to be localised ones.
Global markets:
European shares declined while Asian stocks closed on a mixed note on Friday.
US markets ended lower amid reports that the US government will propose a hike in capital gains tax rate on wealthy individuals.
US President Joe Biden is planning a capital gains tax hike to as high as 43.4% for wealthy Americans. The proposal would hike the capital gains rate to 39.6% for those earning $1 million or more, up from 20% currently, as per reports.
On the economic front, the number of Americans applying for unemployment aid fell last week to 547,000, a new low since the pandemic struck and a further encouraging sign that layoffs are slowing on the strength of an improving job market. The Labor Department said on Thursday that applications declined 39,000 from a revised 586,000 a week earlier.