NEW DELHI: Domestic benchmark indices tumbled in the opening trade on Friday, following US and Asian peers that fell on the worries over resurgence in coronavirus cases and a gloomy economic projection.
At 11.48 am, BSE flagship Sensex was down 430.88 points or 1.28 per cent to 33,107.49 while NSE benchmark Nifty shed 125.90 points or 1.27 per cent to 9,632.50. Banks, auto and metals were the biggest drags on indices.
“The markets opened with a gap down and has made a low of 9,545 after which it has bounced. What needs to be seen is if the level of 9,640 is breached again. If that happens, we should witness more downside pressure which could take the Nifty down to 9,450. For any upside to get activated, we need to cross 9,850,” said Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments.
In the 30-share pack Sensex, Sun Pharma was the only gainer, up 0.29 per cent to Rs 474.95. IndusInd Bank was the biggest loser in the pack, down 5.59 per cent followed by ONGC, Kotak Mahindra Bank and NTPC.
The broader market indices were trading in-line with their headline indices. BSE Midcap tumbled 1.84 per cent while BSE Smallcap shed 2.07 per cent.
Key factors affecting markets:
Resurgence in Covid cases
Coronavirus cases in India continue to grow unchecked as they reached close to 3 lakh figure with 8,500 deaths so far. The country has a recovery rate of more than 50 per cent. Many states are preparing rail coaches as emergency isolation centres in a situation the cases fill hospitals.
Covid cases have jumped in several US states in recent days, raising concern among experts who say authorities have loosened restrictions put in place to contain the spread too early.
Global sell-off
Globally, Asian shares fell sharply on Friday after Wall Street and oil tumbled over growing concerns that a resurgence of coronavirus infections could stunt the pace of recovery in economies reopening from lockdowns.
MSCI’s broadest index of Asia-Pacific shares outside Japan slid 1.3 per cent. Australian stocks dropped 1.74 per cent, while shares in China fell 0.67 per cent. The three major US stock indices fell more than 5% on Thursday, posting their worst day since mid-March.
US stock futures, the S&P 500 e-minis, rose 1.1 per cent in Asia on Friday, but that did little to help sentiment. Japan’s Nikkei stock index slid 1.22 per cent, and shares in South Korea fell 2.24 per cent as some investors booked profits from a recent rally in global equities.
Gloomy projections
The US Federal Reserve released a gloomy economic outlook at the end of its two-day monetary policy meeting on Wednesday. Chairman Jerome Powell warned of a “long road” to recovery.
Economic data appeared to back up the Fed’s projections, with US jobless claims still more than double their peak during the Great Recession and continuing claims at an astoundingly high 20.9 million.
Even in India, despite the economy reopening, 20 per cent of the Indian workforce was unemployed, according to private surveyor, CMIE. Due to the extended lockdown, Indian economy is expected to contract about 5 per cent this year.
Profit booking
Many analysts were warning that the recent rally in the last few days was driven by FOMO and could trap retail investors. They are expecting the indices to revisit March lows in coming months. True to their expectations, investors have started booking profits.
However, there are some veterans like Ramesh Damani and Rakesh Jhunjhunwala who believe the rally to be the start of a new bull run.
