Spike in COVID-19 cases has spooked the Dalal Street, sending bulls back to their barns. Indian equities have lost over 2 per cent on Monday - Nifty slipped below the crucial 14,800 and the 30-blue chip index gave away 50,000 mark to close at 49,744 points.
Consequently, the fear index posted its biggest jump of 14.5 per cent in two months to 25.5. In the last high, recorded on December 21, 2020, volatility had spiked by 24.5 per cent to 23.2 from 18.6 in the previous session.
"Rising economic restrictions from spike in virus cases and weak global cues hit the domestic market sentiment. The rate of market fall was aggravated by a sharp rise in volatility, being a monthly F&O expiry week. FPI inflows, which were leading the rally, slowed down due to global vulnerabilities from rising bond yield and inflation. However, this is a buy on dip market, a short-term correction will trigger new buying, as economic fundamentals have improved, with more focus on industrial and cyclicals," says Vinod Nair, Head of Research at Geojit Financial Services.
In the past five trading sessions, the Sensex cumulatively lost 2,410 points while the Nifty declined 4.2 per cent.
The broader market indices too witnessed sell-off as both midcap and smallcap ended with losses of more than 1 per cent. On the sectoral front, all sectoral indices, except metal and basic materials, ended with losses wherein BSE Energy, realty and IT were the top losers with 2.9 per cent, 2.8 per cent and 2.6 per cent decline, respectively.
According to Ajit Mishra, VP - Research, Religare Broking, "The recent spike in the COVID cases combined with subdued global cues is weighing on the sentiment. After this slide, Nifty has lost momentum and the next major support exists at 14,300. Going ahead, macroeconomic data i.e. GDP data and core sector data and updates on COVID-19 cases would be actively tracked."