Surge in Covid-19 cases and the possibility of a lockdown worried investor on Monday, bringing the market to a monthly low. The slide was led by bank stocks. 

Across-the-board selling due to the rising Covid-19 case and the State governments’ handling of the issue worried investors. Bearish cues from global markets further impacted market sentiments negatively. Risk-off selling by foreign portfolio investors due to Covid aggravated the pain. 

The BSE Sensex closed at 47,883.38 (near the day’s low of 47,693.44) down 1707.94 points or 3.44 per cent over the previous day's close. It hit an intraday high of 48,956.65. The Nifty 50 closed at 14,310.80, down 524.05 or 3.53 per cent. It hit an intraday high of 14,652.50 and an intraday low of 14,248.70. 

The rupee crashed 32 paise to end at 75.05 against the US dollar.  

However, today's biggest sufferer were banking stocks. The Nifty PSU Bank index plunged 9.26 per cent at 1,998.30.

The breadth of the market turned negative as just 510 stocks advanced on the BSE, as against 2,477 declined; 174 stocks remained unchanged. As many as 450 securities hit the lower circuit as compared with 193 that hit the upper circuit. The number of scrips that hit a 52-week high was 159 as against 62 that hit 52-week lows.

Vinod Nair, Head of Research at Geojit Financial Services said, "Further implementation of lockdowns and all-time high covid cases have dragged the market to a monthly low. This is expected to impact the economic growth of Q1-FY23, more than thought earlier."

"Implications to the banking & discretionary sector are presumed to be the highest, drifting market to defensives like IT, Pharma and FMCG. This trend may happen for a couple of trading weeks, down a few weeks covid cases are likely to reduce, bringing growth back."

Banks worst hit 

Banks suffered the most on account of NPA worries following the Supreme court verdict last week. Nifty PSU Bank was down 9.26 per cent at closing, while Nifty Bank was down 5.10 per cent. Analyst fear that interest refunds during last year’s moratorium will cost banks over ₹7,000 crore this quarter.

Among the Bank stocks: Indian Bank, Canara Bank, Punja National Bank and Bank of India crashed over 10 per cent. SBI and Bank of Maharashtra declined by over 6 per cent. 

Pharma stocks, on the other hand, were relatively stable, thanks to weak rupee.  

Only four stocks- Cipla, Dr Reddy and Divi’s Labs were the gainers on Nifty 50. Apart from this, Britannia was the other stock that ended the day in the green on the Nifty 50.

Tata Motors, Adani Ports, IndusInd Bank, Bajaj Finance and UPL were among the laggards on the Nifty 50.

On Sensex, only Dr Reddy managed to remain in the green.

S Ranganathan, Head of Research at LKP Securities, "The gap down opening on Monday's trade widened as the day progressed with all sectoral indices in the red as investors worried on the economic fallout on account of the surge in coronavirus cases. Asset Quality concerns spooked banks and PSU stocks across sectors were the worst hit amidst lockdown worries"

The depreciation of the Indian rupee has further impacted market sentiment. 

Kaynat Chainwala - Fundamental Research Analyst Currencies, Anand Rathi Shares and Stock Brokers, said: “Indian Rupee spot slipped past the 75-mark to nine month low of 75.15 today as rising Covid-19 cases sparked fears of a complete lockdown in Maharashtra and a few other states, dampening hopes of a faster recovery and increasing prospects of RBI’s ultra-loose monetary policy for a longer period.”

No respite for others

On the sectoral front, all indices closed in the red. Nifty Realty was down 7.50 per cent, while Nifty Auto was down 5.11 per cent.

All broader indices were in the red.

The Nifty Midcap 50 fell by 7.08 per cent at closing, while the Nifty Smallcap 50 was down 5.40 per cent. The S&P BSE Midcap index plunged 5.32 per cent and the S&P BSE Smallcap index down 4.81 per cent.

Notably, the volatility index, the fear gauge shot up 16.22 per cent to close at 23.00.

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