Sensex drops 243 points to finish at three-month low after see-saw trade

In a highly volatile trading session, the markets opened on a firm note on Tuesday as the government expanded vaccine reach to people above 18 years, but more restrictions annou­nced by state governments dented sentiment and the benchmark indices pared all the morning gains and ended lower by 0.4-0.5 per cent.

The BSE Sensex slipped 243.62 points or 0.51 per cent to close the session at 47,705.80, the lowest close since January 29. Intraday, the BSE gauge rose as much as 529 points to touch the day's peak of 48,478.34.

Likewise, the Nifty climbed over 167 points to reclaim the key 14,500-level during the day, but surrendered its gains to end at 14,296.40, showing a drop of 63.05 points or 0.44 per cent. The two indices have retreated 8.7 per cent and 6.9 per cent, respectively, from record highs hit in February as surging Covid-19 cases threaten to stifle a nascent economic recovery.

The broader markets witnessed healthy buying interest as both mid-cap and small-cap indices ended higher by 0.5 per cent. On the sector front, a mixed trend was witnessed — IT, FMCG and finance ended with losses, whereas auto, telecom and metals finished in the green.

“The announcement (of fresh restrictions) by state governments and the rising Covid-19 cases would remain a critical factor for investors in the near term. Further, earnings outcomes of Nifty majors would be actively tracked. We maintain our cautious stance for the markets in the near term as increasing restrictions would adversely impact economic activities,” said Ajit Mishra, vice-president-research, Religare Broking.

The indices have formed a strong bearish candle on the daily chart, said Rohit Singre, senior technical analyst at LKP Securities. “We may see the next leg of a move towards the 14,000-mark, which is another strong support on the downside; on the higher side 14,400-14,500 will be a stiff hurdle. "

As of now, Ashis Biswas, head of technical research, CapitalVia Global Research, said the short-term technical condition of the market appears like a sideways correction is in the process. “While it is subject to further price action evolution, it is prudent to wait for a decisive breakout of the range and technical factors to improve before attempting to enter from a short- to medium-term perspective.”

Elsewhere in Asia on Tuesday, equity bourses saw mixed trading as investors awaited the release of China's latest benchmark lending rate. Japan led losses among the region's major markets, followed by Hong Kong. In the US, stocks were on pace for their first back-to-back drop since late March as investors sifted through a batch of corporate results.