Rising Covid cases, US elections jolt global markets for 2nd time this week

Sensex slips 600 pts amid global sell-off; Dow slides 700 pts as uncertainty fuels investor anxiety

The markets were rattled for the second time this week by the renewed rise in Covid-19 cases across the globe, and uncertainty surrounding the US presidential elections added to investors’ anxiety.

The Sensex closed at 39,922, down 600 points, or 1.5 per cent, while the Nifty fell 160 points, or 1.3 per cent, to end at 11,730 — marking the second time this week when benchmark indices fell over one per cent.

European and US futures tumbled as many countries have registered record numbers of infections over the past few days and governments have reintroduced fresh curbs on movement to control the spread, dashing hopes of rapid economic revival.

News reports suggest that German Chancellor Angela Merkel is pressing governors of 16 states to impose a partial lockdown. The restrictions could include curbs on public gatherings and the closure of bars and restaurants. Worries about the outcome of the US presidential elections on November 3 made investors seek refuge in safe-haven assets. 

The failure of US lawmakers to agree on an economic stimulus package before the elections further dampened sentiments. On Tuesday, US President Donald Trump said a stimulus package would come after the elections.

“Rising Covid-19 cases specifically in Europe and the US are worrying investors as strict lockdown could be imposed. And economic recovery, which is still at the nascent stage, could once again get hit. Further, no stimulus announcement, as well as elections in the US, too, are keeping investors on edge,” said Ajit Mishra, VP - Research, Religare Broking.

He said the expiry of October derivatives contracts on Thursday will further add to volatility. The India VIX, a gauge of volatility, jumped 5 per cent to 23.3. Brent crude prices fell over 3 per cent, along with other commodities, amidst growing concerns over demand.

Experts said market players are also hesitant about making big moves. 

“We are falling in tandem with the weak global trend as the world’s economic recovery will slow down this quarter with implications on world equities. Domestically, the market is watching the developments in the Bihar Assembly election,” said Vinod Nair, head of research at Geojit Financial Services.

The market breadth was negative with total advancing stocks at 995 and those in decline at 1,637 on the BSE.

All Sensex components barring four ended the session with losses.  IndusInd Bank was the worst-performing stock, ending the session with a loss of 3.5 per cent. HDFC, ICICI Bank, and Tech Mahindra fell over 3 per cent.  

All the BSE sectoral indices, barring two, ended the session with losses. Banking and finance stocks fell the most, and their gauges fell 2.3 per cent each, respectively.