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Monday, October 19, 2020

Fresh Covid cases, lockdown fears make global, Indian equities bleed

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Corporate India’s capex outlay expected to contract by 20-26% in FY21: Ind-RaMumbai, Sep 24 (IANS) Dangers to an overall international economic recovery such as rising Covid-19 cases, along with possible reimposition of lockdown measures in some European countries, pushed the global and the Indian stock markets deep into the red on Thursday, with the BSE Sensex losing 1,100 points, its worst performance in six months.

Besides, no new stimulus measures for the US, combined with a slower growth forecast for the world’s largest economy, also impacted global sentiments.

Not just equities, but crude oil and precious metal prices fell, leading to a chaos across asset classes.

However, the US dollar made the most of the bloodbath.

The domino effect of such massive downside resulted in the Indian stock markets witnessing a gap-down opening on Thursday.

The BSE Sensex lost 1,100 points and the NSE Nifty50 fell well below the psychological 11,000 mark.

Post Thursday’s selloff, Sensex lost 2,292 points in the last four sessions. This was the sixth consecutive session of loss for the Indian indices, as well as the biggest single day fall for the BSE Sensex in four months and the biggest losing streak (6 sessions) in seven months.

The Nifty50 on the National Stock Exchange (NSE) fell well below the psychological 11,000 mark.

The recent bear run has been due to resurgence in coronavirus cases across the world, largely in Europe, and anticipation of fresh lockdown restrictions across several countries of the continent, including the UK and France.

The BSE Sensex closed at 36,553.60, lower by 1,114.82 points, or 2.96 per cent, from the previous close of 37,668.42.

It opened at 37,282.18 and touched an intra-day high of 37,304.26 or a low of 36,495.98 points.

The Nifty50 closed at 10,805.55, lower by 326.30 points or 2.93 per cent from its previous close.

Manish Hathiramani, technical analyst, Deen Dayal Investments, said: “The support level of 10,900-10,950 has been disrespected during today’s trading session. We have also pierced 10,882 which was made on August 3, 2020. This opens a new target of 10,750. Any bounce can be utilised to short the Nifty for this target.”

Among the sectors, auto, banking, metal and IT indices lost the most.

“European stocks and Asian stocks dropped following a rout in tech shares in the US on Wednesday and as investors have largely given up on the idea that the US Congress will provide a new stimulus, while worrying about a recent rise in Covid-19 cases,” said Deepak Jasani, Head of Retail Research at HDFC Securities.

“Economists at Goldman Sachs cut their US growth forecast for the fourth quarter in half, to 3 from 6 per cent. Investors are bombarded by a perfect storm of problems including rising virus infections, new lockdowns, a slowing economic recovery, stalled US stimulus talks and election uncertainty. Investors also fretted that a second wave of coronavirus cases during the northern hemisphere’s coming winter will derail the economic recovery.”

According to Vinod Nair, Head of Research at Geojit Financial Services: “Indian benchmark indices had a gap down opening and kept losing ground as the day wore on, to finally end the day around 2.8 per cent down. Markets tracked weak global cues as the uncertainty witnessed in the last few days gave way to negativity, with broader markets also underperforming.”

“The uncertainty regarding an economic recovery, the unabated rise in virus infections, and today being derivatives expiry day, all contributed to the negativity. With volatility expected to be high, traders are advised to remain cautious.”

In addition, Aamar Deo Singh, Head Advisory, Angel Broking said: “Markets witnessed a steep fall with the benchmark indices down by almost 3 per cent, with sell-off across global markets as the US Federal Reserve statements on pace of economic recovery, appears to have impacted investor sentiment.”

“So, after the spectacular rally since March, we are witnessing profit-booking. Further it was the monthly F&O Expiry, which also added to the enhanced volatility.”

Analysts said that the bear run is likely to continue in the near run with no respite seen from the risiing Covid cases.

–IANS

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