Indian stocks fall out of bull territory ahead of earnings season

The Sensex declined 1 per cent to end at 30,379.81 after rising as much as 2.9%, while the Nifty dropped 0.8% to close at 8,925, after rising to 9,261

Indian stocks fell on Wednesday, with the benchmark indices retreating from a level indicating bull territory, ahead of the earnings season that could give some insight into the outlook for companies under lockdown. The Sensex declined 1 per cent to end at 30,379.81 after rising as much as 2.9 per cent, while the Nifty dropped 0.8 per cent to close at 8,925, after rising to 9,261. Earlier in the day, both gauges had risen to levels representing a rebound of more than 20 per cent from their March 23 lows, an increase seen as a technical bull market.

Markets were closed on Tuesday for a holiday. India’s quarterly corporate earnings season kicked off on Wednesday with Wipro reporting results after market hours that were in line with analyst estimates.

Prime Minister Narendra Modi on Tuesday extended a nationwide lockdown through May 3 as the country steps up its fight to contain the spread of the novel coronavirus among its 

1.3 billion people. 

 

The prolonged lockdown is expected to result in a 25 per cent drop in gross domestic product from a year earlier for the current quarter, according to Bloomberg Economics.

After taking cues from the US in the morning, the market later started to come to terms with an extension of the lockdown, which has happened “without any economic or financial road map,” said Umesh Mehta, the Mumbai-based head of research at Samco Securities.

The Sensex surged 13 per cent last week after fewer virus cases were reported in some global hotspots. India currently has 11,555 confirmed cases and 396 deaths linked to the crisis.

The rupee weakened 0.2 per cent to 76.45 a dollar, while the 10-year bond yield dropped 7 basis points to 6.42 per cent.  Eleven of the 19 sectoral indices compiled by the BSE rose, led by a gauge of fast-moving consumer goods companies. Eighteen Sensex shares fell, while 12 rose. 

Hindustan Unilever contributed most to the index with a 6 per cent increase, HDFC Bank was the biggest drag, slipping 3.6 per cent, while Kotak Mahindra Bank was the biggest loser, dropping 6.2 per cent.