Extending decline for the second straight session, Sensex and Nifty closed over 2% lower on Friday, as market sentiment was weak amid the rising number of COVID-19 cases across the country.
Sensex fell 674 points to close at 27,590 and Nifty lost 170 points to end at 8,083. Overall, 20 out of 30 Sensex stocks and 30 out of 50 stocks on Nifty ended in the red today.
Banking, metal and auto indices were the top laggards today, while pharma was the only gainer in bearish trade as many brokerage reports, as well as market experts, suggested that the sector is least impacted by COVID-19 pandemic.
S Ranganathan, Head of Research at LKP Securities, said, "Sustained selling took place in Banking and Automobile stocks even as few heavyweights like Kotak and Larsen recouped some of the losses on account of expected MSCI changes. Smart buying continued in the Sugar Sector as many of the well run integrated factories were trading at market capitalisation equal to the cost of putting up boilers leave alone the sugar factory, distillery and power plant."
Expressing views on today's market trend, Ajit Mishra, VP - Research, Religare Broking said, "Moody's report on the banking sector wherein they've changed their outlook from negative to stable, further dented the sentiment. As a result, a sharp cut in financials was witnessed which pushed the Nifty below 8100. However, an uptick in defensive pack viz. pharma and FMCG majors capped the damage to some extent."
Further, market participants said investors turned risk-averse over worries of economic slowdown due to the lockdowns introduced, hammering demand and supply chains.
"The adverse effects on several sectors are already visible as most companies have shut their plants and wherever possible are allowing employees to work from home (WFH). Our calculations suggest that only 30-40% of the economy is currently operational at different intensities," said Motilal Oswal in its report and added that, "With 14 days of complete lockdown in Apr'20 and assuming that things normalize from mid-May'20, real GDP could decline 12.2% YoY in 1QFY21".
The incessant selling continued in March with FIIs pulling out Rs 65,816 crore, proving to be the worst sell-off ever for Indian markets. FIIs withdrew Rs 12,684 crore from equity market in February and Rs 5,359 crore in January this year.
Vinod Nair, Head of Research at Geojit Financial Services said, "A ratings downgrade for the Banking sector, due to the impact of COVID-19 and ensuing stressed asset concerns, impacted the financial stocks. FIIs were net sellers to the tune of Rs.1100 Crores, on April 1, and show no signs of reversal." Globally indices traded muted today, with SGX Nifty trading 2.5% lower, and Dow Jones Futures falling 1.3%. Domestic markets weakened further tracking cues from European indices that opened in the red. While FTSE and CAC both fell 1% each, DAX was down 0.50%. Markets in Asia traded mixed as the economic fallout from the coronavirus pandemic continued to weigh on investors. While Shanghai Index, SGX Nifty, Strait Times and Hang Seng traded marginally lower, Nikkei and Kospi traded marginally higher.
Vinod Nair said, "The week saw the benchmark indices closing down by 7%, on a weekly basis. The global market trend was driven by the spread of the COVID-19 infections and the steep increase in the number of infections and the deaths."
Worldwide, there are over 10.15 lakh confirmed cases and 0.53 lakh deaths from the coronavirus outbreak. Of these, over 2.6 lakh have recovered globally.
In India, coronavirus cases continued to rise despite a complete lockdown. India is consecutively reporting the biggest single-day jumps in new COVID-19 cases since Monday. As of Wednesday, the number of infected cases in India has increased to 2,301, with 156 recovered cases. The death toll from coronavirus in India has risen to 56. The novel coronavirus is in the local transmission phase in India.
Commenting over Nifty's near term outlook, Manav Chopra, CMT, Head Research - Equity, Indiabulls Securities said, "Nifty is broadly in the range of 9000-7700 since past 12 trading sessions and is currently at the 61.8% retracement of the range. The strategy should be to trade the range by going long at lower end and selling near the higher end. This would enable high probability defined risk trade. At the current juncture if the index holds above 8050 in the next session then one can go long for immediate targets of 8250-8400 but if it fails then one should look for 7800 levels to go long."
In wake of the lockdown amid the coronavirus outbreak, Reserve Bank of India has announced today a reduction of the timing of debt, as well as currency market. However, the timing for the equity market remains unchanged.