Sensex nosedives 870 points as Maharashtra goes into partial lockdown

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After opening on a weak note benchmark Indian equity indices extended their losses as the COVID-19 cases crossed the one lakh mark in the nation. Of this, ~80% of cases are in Maharashtra where a partial lockdown has been put in place till Apr 30.

After hitting the day’s low of 14,459.50 in mid-morning trade, the Nifty pared losses and closed above the 14,600 mark. IT and metal stocks bucked the broader selloff.

At close, the Sensex was down 870 points or 1.74% at 49,159, and the Nifty was down 229 points or 1.54% at 14,637.

Bajaj Finance was the top laggard in the Sensex pack, plunging around 6%, followed by IndusInd Bank, SBI, M&M, Axis Bank, Bajaj Auto and ICICI Bank. On the other hand, HCL Tech, TCS and Infosys were among the gainers.

“The market witnessed a huge sell-off today as India’s second wave of COVID-19 is getting bigger than anticipated and is expected to ruin the pace of economic recovery. High valuation added further concern due to a possible downgrade in Q1FY22 earnings,” said Vinod Nair, Head of Research at Geojit Financial Services.

Sectorally, Nifty IT index rose 1.97% and Nifty Metal index was up 0.89%. Nifty Bank, Private Bank, Financial services, Realty, Auto, and Media indices slipped between 2.5% to 3.5%.

“The steep fall in financials today can be attributed to increased apprehensions among investors from economic restrictions imposed in certain key states including Maharashtra. Banks, which started seeing steady improvement in asset quality and improvement in credit costs, may see further delay in credit cycle recovery and pressure in asset quality if business restrictions are imposed by more states due to a steep rise in Covi-19 cases,” Binod Modi, Head Strategy, Reliance Securities.

The market breadth was weak. On the BSE, 1,061 shares rose and 1,897 shares fell. A total of 183 shares were unchanged.

However, pain in the broader market was lower compared to benchmarks as the BSE MidCap and SmallCap indices closed 1.13% and 1%, respectively.

Economy: The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) fell from 57.5 in February to a seven-month low of 55.4 in March. However, the latest reading was indicative of a substantial improvement in the health of the sector that outpaced the long-run series average.

Insolvency and Bankruptcy Code Ordinance, 2021: The government has amended the insolvency law to provide for a pre-packaged resolution process for micro, small and medium enterprises. An ordinance was promulgated to amend the Insolvency and Bankruptcy Code (IBC) on Sunday, 4 April 2021.

As per the ordinance, it is considered necessary to urgently address the specific requirements of Micro, Small and Medium Enterprises (MSMEs) relating to the resolution of their insolvency, due to the unique nature of their businesses and simpler corporate structures.

It is considered expedient to provide an efficient alternative insolvency resolution process MSMEs to ensure a quicker, cost-effective and value maximising outcomes for all stakeholders, in a manner which is least disruptive to the continuity of their businesses and which preserves jobs.

Global markets: Asian shares rallied across the board on Monday as investors cheered a strong bounce in U.S. job growth last month amid accelerating vaccine rollout. Markets in mainland China and Hong Kong are closed today for holidays.

Investors monitored the progress of debate over U.S. President Joe Biden’s $2.25 trillion infrastructure proposal, as Republicans reportedly expressed guarded support for a more limited plan.

The response so far in bond markets has been muted, with inflation concerns easing amid doubts over the viability of more-generous spending, even as central banks remain reportedly committed to keeping interest rates lower for longer.

China is reportedly ramping up its COVID-19 vaccination push, aiming to be twice as fast as the U.S., and a leader of the World Health Organization’s program has reportedly said the rollout of shots will be expanded to 100 countries in the next couple of weeks, from 84 at present.