Sensex tumbles 585 points amid rising Covid cases, US bond yields

Owing to a dovish stance maintained by the US Fed in its latest policy review benchmark Indian equity indices opened with a gap up. However, in the afternoon trades, it gave up the gains and entered negative terrain as U.S. 10-year bond yield touched 14th month high of 1.728%. That apart, increasing domestic COVID-19 cases and high crude oil prices also dented investors’ sentiment.

At close, Sensex ended at 49,216 levels, sinking 585 points or 1.2%. On the NSE, the Nifty50 tanked 163 points or 1.1% to close at 14,557. This was the indices fifth consecutive session of declines.

On an intraday basis, Nifty slumped nearly 400 points to hit a low of 14,479 and Sensex plummeted 1,334 points from day’s high to 48,962.

Infosys (down 3.19%), TCS (down 2.17%), Reliance Industries (down 2.15%) and Kotak Mahindra Bank (down 2%) dragged the indices lower. While stocks like ITC, Bajaj Auto, M&M, Maruti & Bharti Airtel were the top gainers.

The broader market ended in losses. The S&P BSE Mid-Cap index lost 1.33% while the S&P BSE Small-Cap index fell 1.58%.

Sellers outnumbered buyers. On the BSE, 834 shares rose, and 2,147 shares fell. A total of 140 shares were unchanged.

“Nifty and Sensex were down 1.25 % today despite positive statements by US Fed on the interest rate outlook and continuance of accommodative policy. The Indian market has been in a corrective phase for the past 10 days, due to factors like high bond yields in the U.S., a slew of QIPs and IPOs taking away liquidity from the system and an increased no of covid cases being reported across the country. The market may remain dull over in the near term but once the Q4 earning previews start flowing in there would be a renewed interest by market participants,” Hemang Jani, Head Equity Strategy, Broking & Distribution of Motilal Oswal Financial Services.

All the key sectoral indices, barring FMCG and Metal, ended in the red. Nifty IT index lost the most was down 3.09%, followed by Nifty Pharma slumped 2.32%, Nifty realty was down 1.47% and Nifty Bank tanked 1.09%.

Global markets

Shares in Europe and Asia advanced on Thursday after the Federal Reserve pledged to keep the monetary policy and rates unchanged and projected a rapid jump in U.S. economic growth this year as the COVID-19 crisis eases.

In the U.S., the S&P 500 and Dow Jones Industrial Average closed at record highs on Wednesday after the Fed predicted a fast economic recovery from the coronavirus pandemic and said it would maintain its interest rate at close to zero. It was the first time the Dow closed above 33,000 points.

While the Fed expects benchmark interest rates to remain near zero for the next two years, the central bank upgraded their economic outlook to reflect expectations for a stronger recovery from the pandemic-triggered recession. Gross domestic product is expected to grow 6.5% in 2021 before cooling off in later years.

Fed Chair Jerome Powell said in a press conference that the Fed would need to see material and sustained move in inflation above 2% before considering changes to its current easy policy stance.