MUMBAI: Investor wealth took a massive beating of ₹8.77 trillion on Monday as markets went into a tailspin, dropping a whopping 1,707.94 points after a possiblity of lockdown in Maharashtra state after a rise in covid cases sent jitters to investors.
Sentiment turned extremely negative on expectation of a complete lockdown in Maharashtra and more states imposing localised curbs following rise in the number of coronavirus cases.
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The benchmark index, Sensex ended at 47,883.38 down 1,707.94 points or 3.44% and the broader index, Nifty closed at 14,310.80 declining 524.05 points or 3.53%. The indices scaled record high of 52,516 and 15,431 on 16 February amid an extended rally post euphoria over Union Budget on 1 February.
The decline in wealth came after investors booked profit, the market capitalisation of BSE-listed companies too plunged ₹8,77,436 crore to ₹200.86 trillion.
IndusInd Bank was the top loser in the Sensex pack, dropping over 8.60%, followed by Bajaj Finance, SBI, ONGC, Titan Company and M&M.
“Since the second wave of the pandemic is turning out worse than expected, there is profound uncertainty about its impact on the economy and the markets. Since the situation is the worst in economically significant Maharashtra, this can impact the market’s assumption of around 11% GDP growth and above 30% earnings growth,” says Dr. V K Vijayakumar, chief investment strategist at Geojit Financial Services.
Pharma and IT sectors are likely to remain resilient even during a market downturn courtesy the health crisis and rupee depreciation. However, cyclical stocks are likely to be under pressure he added.
BSE sectoral indices were also hit hard, led by realty, industrials, metals, basic materials, auto, power, and finance tanking up to 7.70%.
Maharashtra reported its highest single-day spike in Covid-19 cases with 63,294 fresh cases in 24 hours on Sunday. Almost 10,000 of these were from the state capital Mumbai. There are now 5,65,500 active cases in Maharashtra.
Ajit Mishra, VP-Research, Religare Broking Ltd said “Markets started the week on a feeble note and lost over 3.5%. The benchmark indices opened a gap down and continue to plunge southwards due to rising covid-19 cases, vaccine supply issues and the possibility of lockdown in various parts of the country.”
“Selling pressure widened as the day progressed and consequently the Nifty ended lower by 3.5% at 14,310 levels. The broader markets too were not spared and it ended lower in the range of 4.8-5.3%. On the sector front, all the indices ended with negative bias wherein PSU banks, auto and metals were the top losers” he added.
From the broader market, the BSE midcap and smallcap fell by 5.32% and 4.81%, respectively.
Market breadth was negative with 2,477 stocks ending lower against 510 ending higher on BSE. However, 174 stocks were unchanged.
Number of shares rising to their 52-week highs stood at 159 against 62 touching their 52-week lows. Tracking the negative sentiment in the market, 193 stocks hit their upper circuits against 450 falling to their lower circuits, respectively.
Foreign institutional investors have net bought $7.45 billion in equity and net sold $2.34 billion in debt since the beginning calendar year, while domestic institutional investors have net sold ₹22,266.39 crore worth of stocks, according to data on the exchanges.