Lockdown 3.0, global tension rattle markets; Sensex, Nifty crash nearly 6%

Indian markets dropped nearly 6 per cent on Monday amid a sell-off in global equities. Rising tensions between the US and China and extension of stay-at-home orders by another two weeks triggered risk-off sentiment among investors.
 

The Sensex closed at 31,715, down 2,002 points, or 5.94 per cent — its biggest single-day loss since March 16. Investors witnessed a wealth erosion of Rs 5.82 trillion in the BSE-listed companies. The Nifty50 index fell 566 points, or 5.7 per cent, to end at 9,294. This was the sixth time in two months when the indices logged more than 5 per cent fall.
 

The latest decline comes on the back of a 15 per cent gain in April and nearly 30 per cent rebound since the coronavirus lows seen on March 23. Market experts said the sharp pullback lacked fundamental basis, making it susceptible to correction and wild swings.

Most global markets fell in the range of 2-4 per cent on Monday, with India seeing the sharpest decline. Investors took money off risky assets amid a flare-up in tensions between the US and China. US President Donald Trump threatened new tariffs on Beijing as part of retaliatory measures. Investors feared fresh standoff could weigh on the already fragile world economy.
 

Market players said another reason for India’s underperformance was due to the disappointment with an extend lockdown. Analysts said many red zone districts were significant contributors to the country’s gross domestic product. Experts said the extension should have been backed by stimulus measures.

“The fall was a result of a combination of the disappointment over lockdown extension and weak global cues. Many markets also fell on Friday when we were shut. Apart from some concessions from the Reserve Bank, we haven’t announced any big stimulus like other nations have,” said Andrew Holland, chief executive, Avendus Capital Alternate Strategies.

Poor economic data and weak quarterly results of some index majors such as Reliance and Hindustan Unilever also disappointed investors. Investors also fretted over plunge in tax collections. In March, GST collection plummeted to Rs 28,309 crore against Rs 1.13 trillion recorded in the same month last year. “The GST collections will take a huge hit in April and May.

States will not have money to do anything at all. It is going to be catastrophic for the economy,” said Shankar Sharma, founder, and vice-chairman, First Global.
 

Both foreign and domestic institutional investors were heavy sellers, with the former dumping stocks worth nearly Rs 1,400 crore and the latter selling shares worth Rs 1,660 crore. The market breadth was weak on Monday, with total declining stocks at 1,849 and those advancing at 568 on the BSE. All the Sensex components except two — telecom and health care — ended the session with losses.
 

Finance, banking, and metal stocks declined the most, and their gauges fell 8.3 per cent each. ICICI Bank was the worst-performing Sensex stock and fell 11 per cent. Bajaj Finance and HDFC fell more than 10 per cent each. Two-thirds of Sensex stocks fell more than 5 per cent. Sun Pharma and Bharti Airtel were the only two gainers.