The second wave of Covid has left the stock markets gasping, stopping their continuous nine-month rise. As of today’s close, key indices Sensex and Nifty have ended lower for the third consecutive week. This is the longest weekly streak of decline in eleven months.

Sensex, which closed at 47,878, is now down 8.83 per cent from the all-time high of 52,516 it hit in February. The Nifty, which closed at 14,341, is now down 7 per cent from its peak of 15,431.

Between March 2020 and February, Sensex and Nifty had gained 100 per cent from the lows they hit during the first wave of Covid. Hence, a correction was expected, experts told BusinessLine . While Covid has hit the sentiment in the short run, the election results of the five States on May 2 will decide the next big move for the markets, experts said.

“Markets had become excessively overvalued, with Nifty at 15,400, so this correction — whether induced by US bond yield or Covid second wave or both — was much needed. However the liquidity story still holds, so as the cases subside, I don’t rule out another test of 15,400 on the Nifty if not higher, led by banks and consumer discretionary stocks,” said Rahul Arora, CEO, Institutional Equities, Nirmal Bang.

Foreign portfolio investors were net sellers this week on the back of weakness in the rupee, which remained above the 75 mark against the dollar. In April, FPIs sold stocks worth ₹7,583 crore in the cash segment, but were . net buyers of ₹1,144 crore in the stock futures segment, indicating they expected an upside in the near term.

Related Topics
comment COMMENT NOW