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Markets witness complete massacre

There is no respite for the Indian markets and they continued to grapple in deep red in afternoon session, as concerns over rising COVID-19 cases in the country and fears of lockdown in certain states weighed on sentiment. Markets mood remain under pressure as foreign portfolio investors (FPIs) have withdrawn a net Rs 929 crore from Indian markets so far this month amid concerns over rising Covid-19 cases denting the economic recovery.

All sectoral indices on BSE were witnessing heavy selling with realty and industrials remaining top losing indices, trading down by 7.11% and 5.96% respectively. At present, while Sensex was trading below psychologically crucial 47,900, Nifty managed to held on to 14,350 mark. On the global front, Asian markets were trading mostly lower on uneven global recovery from the pandemic against the latest upbeat U.S. outlook from Federal Reserve Chair Jerome Powell.

The BSE Sensex is currently trading at 47893.09, down by 1698.23 points or 3.42% after trading in a range of 47779.71 and 48956.65. There were 1 stocks advancing against 29 stocks declining on the index. The broader indices were trading in red; the BSE Mid cap index lost by 5.38%, while Small cap index was down by 4.95%. The top losing sectoral indices on the BSE were Realty down by 7.11%, Industrials down by 5.96%, PSU down by 5.88%, Auto down by 5.28% and Bankex was down by 5.13%, while there were no gaining sectoral indices.

The only gainers on the Sensex were Dr. Reddys Lab was p by 3.27%. On the flip side, Bajaj Finance down by 8.23%, Indusind Bank down by 8.00%, SBI down by 7.22%, Mahindra & Mahindra down by 5.83% and Axis Bank was down by 5.63% were the top losers. Meanwhile, amid recent spike in coronavirus cases, Fitch Ratings has said the second wave of COVID-19 infections poses increased risks for India’s fragile economic recovery and its banks.

The rating agency expects a moderately worse environment for the Indian banking sector in 2021, but headwinds would intensify if rising infections and follow-up measures to contain the virus further affect business and economic activity. India’s active COVID-19 infections have been increasing at a rapid pace with new infections exceeding 1 lakh a day in early April 2021, against 9,300 in mid-February. The agency said ‘the government’s more accommodative fiscal stance may also mitigate some short-term growth pressures.

However, inoculating India’s large population in a fast and effective way will be important to avoid repeated disruptions’. Fitch forecasts India’s GDP growth at 12.8 per cent for the current financial year ending March 2022 and this incorporates expectations of a slowdown in the April-June quarter due to the flare-up in new coronavirus cases.

But the rising pace of infections poses renewed risks to the forecast. It said ‘over 80 per cent of the new infections are in six prominent states, which combined account for roughly 45 per cent of total banking sector loans. Any further disruption in economic activity in these states would pose a setback for fragile business sentiment, even though a stringent pan-India lockdown like the one in 2020 is unlikely’. It also said the operating environment for banks will most likely remain challenging against this backdrop. This second wave could dent the sluggish recovery in consumer and corporate confidence, and further, suppress banks’ prospects for new business.

There are also asset quality concerns since banks’ financial results are yet to fully factor in the first wave’s impact and the stringent 2020 lockdown due to the forbearances in place. Fitch noted that ‘MSMEs, however, benefited from state-guaranteed refinancing schemes that prevented stressed exposures from souring’. The CNX Nifty is currently trading at 14330.45, down by 504.40 points or 3.40% after trading in a range of 14283.55 and 14652.50. There were 3 stocks advancing against 47 stocks declining on the index. The top gainers on Nifty were Cipla up by 4.92%, Dr. Reddys Lab up by 3.26% and Divis Lab was up by 3.22%.

On the flip side, Tata Motors down by 9.99%, Adani Ports  down by 8.80%, Bajaj Finance down by 8.20%, Indusind Bank down by 8.03% and UPL was down by 7.26% were the top losers. Asian markets were mostly trading lower; Hang Seng decreased 266.73 points or 0.93% to 28,432.07, Shanghai Composite declined 33.06 points or 0.96% to 3,417.62, Straits Times trembled 20.34 points or 0.64% to 3,164.20.

Jakarta Composite lost 109.64 points or 1.81% to 5,960.57 and Nikkei 225 was down by 229.33 points or 0.77% to 29,538.73. On the other side, Taiwan Weighted strengthened 5.60 points or 0.03% to 16,859.70 and KOSPI was up by 3.71 points or 0.12% to 3,135.59.

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