Benchmark indices slipped for the fifth consecutive day due to a heavy sell-off in the afternoon session on Thursday amid Covid concerns. According to experts, the selling was across-the-board, with almost all the sectoral and market-cap based indices ending in the red.

After opening on a high note, thanks to US Fed's dovish stance overnight, the market erased all gains in the second half and slumped further due to a spike in US bond yields apart from Covid concerns.

Binod Modi, Head Strategy at Reliance Securities, said: “Having seen a brisk gap-up opening on positive global cues, domestic equities fell sharply for the fifth consecutive day as a sharp rise in Coronavirus cases in the country made investors jittery. The mounting concerns of possible fresh economic restrictions made enthusiasm of dovish commentary from the Federal Reserve short-lived for domestic markets. Additionally, a fresh spike in 10-Year USA Treasury yield to 1.72 per cent also weighed on investors’ sentiment."

The BSE Sensex closed at 49,307.47, down 494.15 points or 0.99 per cent. It hit an intraday high of 50,296.35 and an intraday low of 48,962.36. The Nifty50 slipped below 14,600, closing at 14,557.85, down 163.45 points or 1.11 per cent.

S Ranganathan, Head of Research at LKP Securities said, "With US 10-year yield hitting their highest level in over a year, bears held the upper hand on Thursday even as the Fed kept rates unchanged. Selling in Financials kept markets in the red with broader markets seeing profit booking in IT & Pharma stocks ahead of the FTSE rebalancing tomorrow."

ITC, Bajaj Auto, Grasim, Hindalco and Bharti Airtel were among the top gainers on the Nifty50 while HCL Tech, Infosys, Divi’s Laboratories and Hero Motocorp were the top laggards.

Vinod Nair, Head of Research at Geojit Financial Services said, "Indian equities pared its early optimism and fell into a sharp correction as US bond yield rose to its highest level since January. Dovish comments from the Fed chief on the strong economic bounce back and continuing its accommodative stance could not weigh down the rally in the US bond market. Indian markets had witnessed higher volatility compared to its global peers as domestic investors turned extra cautious on increasing Covid cases in India & a fall in FII inflows."

On the BSE, as many as 2,160 stocks have declined while 822 moved up and 131 remained unchanged. Similarly, 389 stocks on Thursday hit the lower circuit while 208 touched the upper circuit. However, despite a sharp fall, the volatility index at 20.08 remained calm.

Value erosion

The consecutive fall in equity markets in the last five days took a huge toll on investors' wealth.

According to Modi, "Investors’ wealth got eroded by over ₹3 lakh crore today and nearly ₹9 lakh crore in the last five trading days. In our view, a sharp rise in daily Covid-19 cases in India has raised apprehensions about the sustainability of ongoing rebound in corporate earnings,” added Modi.

IT stocks lose shine

Among the sectoral indices, all indices except Nifty Metal and Nifty FMCG closed in the red. Nifty Metal was marginally up by 0.04 per cent at closing.

Meanwhile, Nifty IT was down 3.09 per cent. Nifty Pharma was down 2.32 per cent while Nifty PSU Bank plunged 1.96 per cent.

Broader indices underperform

All broader indices closed in the red. The broader indices have underperformed on Thursday and witnessed high-profit booking. Nifty Midcap 50 was down by 1.35 per cent at closing, while Nifty Smallcap 50 plunged 1.10 per cent.

BSE Midcap was down by 1.09 per cent while BSE Smallcap was down 1.47 per cent.

“All key sectoral indices ended in red today with IT, Pharma and PSU Banks correcting steeply by 2-3.5 per cent. Huge profit booking remained visible in midcap and small-cap stocks,” said Modi.

Related Topics
comment COMMENT NOW