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regular-article-logo Sunday, 14 April 2024

Covid spike spooks markets

Foreign portfolio investors dumped stocks which took the rupee lower to 74.35 to the dollar even as gold pushed up its price to above Rs 47,000 per 10 gm

Our Special Correspondent Mumbai Published 20.04.21, 01:13 AM
The Sensex plunged 1469 points intra-day but receovered ground to close at 47949.42 with investor wealth eroding Rs 3.53 lakh crore.

The Sensex plunged 1469 points intra-day but receovered ground to close at 47949.42 with investor wealth eroding Rs 3.53 lakh crore. Shutterstock

The Sensex sank 833 points at the end of a torrid day of selling, the rupee tumbled to 74.87 against the US dollar and gold — always seen as a safe haven in hard times — climbed above Rs 47,000 per 10 gm as panicky investors tried to make some sense out of the worrying resurgence of the coronavirus pandemic and the Centre’s ham-handed response to a snowballing crisis.

Investors on Monday feared the resurgence of the virus would adversely affect earnings. The Sensex plunged 1469 points intra-day but recovered ground to close at 47949.42 with investor wealth eroding by Rs 3.53 lakh crore.

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“Indian equities are distinctly under-performing other comparable equity markets in Asia. The near term outlook would remain clouded and keep markets volatile. We expect pharma, speciality chemicals, IT services to outperform in the near term,” Gaurav Dua of Sharekhan by BNP Paribas said.

The slump in equity values comes at a time of the start of the fourth quarter results that have proved to be a mixed bag so far for India Inc. There are apprehensions that the spate of localised lockdowns may adversely impact India’s fledgling recovery, corporate earnings and its banking sector. In fact, leading brokerages have already downgraded India’s GDP growth projections for the current fiscal to as low as 10 per cent.

Market circles said the rapid rollout of the vaccine has pushed equities to record highs but the states have started complaining on the shortage of the jab. Prices are likely to remain under pressure till the number of Covid-19 cases peaks out, analysts said.

In the trading on Monday, the 30-share Sensex opened lower at 47940.81 and crashed to an intra-day low of 47362.71 — a fall of 1469.32 points, It managed to pare some initial losses but still ended 882.61 points or 1.81 per cent lower at 47949.42. Similarly, the broader NSE Nifty tanked 258.40 points or 1.77 per cent to 14359.45.

RBI intervention

The rupee on Monday fell 52 paise to close at 74.87 against the dollar. Analysts said that if the current trend continued, the RBI may intervene in the market.

“The RBI is expected to be active and may intervene aggressively to curb volatility. Over the near term, we expect a range of 74.00 and 75.50,’’ Anindya Banerjee of Kotak Securities said.

K.V.S. Manian, director & member of the group management council at Kotak Mahindra Bank, allayed fears of a fall in the value of the rupee. “The fundamentals of the economy both Indian and international have not changed or are not yet expected to change significantly for the rupee to weaken so much. The bond and equity markets are still not showing similar levels of weakness..”

Meanwhile, gold rallied Rs 411 to Rs 47,291 per 10 gram in the national capital on Monday reflecting strong buying in the precious metal and rupee depreciation.

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