Benchmarks plunge over 1% amidst sharp rise in Covid cases

Benchmark indices plunged over 1 per cent at closing, extending losses through the day as a sharp rise in Covid cases weighed on investor sentiments.

Markets remained under pressure throughout the day after a flat opening as India reported an all-time high of over 1 lakh Covid-19 cases. Binod Modi, Head Strategy at Reliance Securities said, “Domestic equities witnessed heavy sell-off today as a sharp rise in Covid-19 cases in the country and economic restrictions imposed in Maharashtra dented investors’ sentiments".

The BSE Sensex, after plunging to a low of 48,580.80, closed at 49,159.32, down 870.51 or 1.74 per cent. It hit an intraday high of 50,028.67. Banking, financial and auto stocks led the market decline. The Nifty 50 after slipping below the psychological mark of 14,500, hitting an intraday low of 14,459.50, recovered marginally to close at 14,637.80, down 229.55 points or 1.54 per cent. It hit an intraday high of 14,849.85.

As many as 1,058 shares have advanced on the BSE, while 1,897 declined and 186 remained unchanged. Notably, 300 securities hit the lower circuit as against 321 securities that hit the upper circuit; 164 securities hit their 52-week high and 62 their 52-week low.

Lockdown worries

“While sharp improvements in key high frequency economic indicators in March i.e. GST collections, e-way bills and railway freights bode well for economy, a sharp spike in Coronavirus cases in the country and resultant business restrictions are likely to remain as near-term headwinds for domestic equities. Imposition of weekend lockdown in Maharashtra, which contribute over 13 per cent of country’s GDP and 20 per cent of India’s industrial output, certainly does not augur well,” said Modi.

According to Care Ratings, Maharashtra lockdown would lead to a dip in India’s GVA growth by 0.32 per cent.

While banking, auto and financials led the decliners, information technology stocks gained ahead of the Q4 results.

HCL Tech, TCS, Wipro, Britannia and Infosys were the top gainers on the Nifty 50 while Bajaj Finance, IndusInd Bank, State Bank of India Eicher Motors and Mahindra & Mahindra were among the top laggards.

Focus on MPC meeting

Separately, the three-day meeting of RBI’s Monetary Policy Committee (MPC) begins today, and the outcome is expected to be on April 7. The meeting will be a major driving factor for the market this week.

Vinod Nair, Head of Research at Geojit Financial Services, said: "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. Barring IT, metal and telecom, all sectors remained in the red. A policy decision in the upcoming MPC announcement and Q4 earnings will define the market volatility in the coming days."

IT stocks: Betting on Q4

All the sectoral indices, except Nifty IT and Nifty Metal, closed in the red.

Nifty IT extended gains through the day as analysts are expecting a strong Q4 show from IT majors and a positive FY22 outlook.

The Nifty IT was up 1.97 per cent while Nifty Metal was up 0.89 per cent.

“We expect Tier I IT companies to report growth between 2.5 per cent and 3.4 per cent QoQ (barring TECHM), their strongest 4QFY21 performance in the last five years. Tier II IT should deliver 3.3-5.2 per cent QoQ growth (except MPHL and ZENT),” said Motilal Oswal Research.

Emkay Securities also expects a “strong revenue growth momentum from Q3FY21. Cloud, digital transformation, automation, AI and cybersecurity continue to see healthy demand,” it said.

On the other hand, the Nifty PSU Bank recorded the highest losses and was down 4.10 per cent at closing. The Nifty Bank was down 3.48 per cent while Nifty Financial Services was down 3.25 per cent. Nifty Auto was down 2.54 per cent.

“Barring IT and Metals, all key sectoral indices witnessed steep correction with Financials witnessing steepest fall mainly on renewed apprehensions about asset qualities and recovery in credit growth cycle,” said Modi.

Broader indices

All broader indices slipped further with Midcap stocks underperforming significantly.

Nifty Midcap 50 was down 2.16 per cent while the Nifty Smallcap 50 was down 1.35 per cent. The S&P BSE Midcap index was down 1.13 per cent while S&P BSE Smallcap was down 1.08 per cent.

The volatility index closed 6.14 per cent higher at 21.22.