Domestic stocks dropped on Monday following the imposition of strict restrictions in Maharashtra to contain the spread of Covid-19 infections, with investors fearing that the resurgence in virus cases could dent the economy recovery and hurt corporate earnings.
The benchmark Sensex fell as much as 1,449 points, or 2.9 per cent, in intra-day trade. The index settled at 49,159, logging a loss of 870 points, or 1.7 per cent. The Nifty 50 index closed at 14,638, down 229 points, or 1.5 per cent. Both the indices fell the most since March 24. The rupee weakened 18 paise against the dollar to end at 73.29.
India on Monday recorded the biggest single-day rise in Covid-19 cases with daily count crossing 100,000, surpassing the previous record made in September 2020. Rising Covid cases have led to weekend lockdowns in Maharashtra, home to financial capital Mumbai. The new restrictions will be in place till the end of this month.
Rating agency CARE said the new curbs could impact gross value added (GVA) of around Rs 40,000 crore. Trade, hotels, transport, financial services, and real estate could be impacted the most, it said.
India was the standout worst-performer among global markets. Global equities were up on Monday, reacting to the strong bounce in US job growth last month amid the accelerating vaccine roll-out. In March, India had underperformed major global markets. Analysts said the underperformance might continue in the near term given the rise in caseload.
Financials dominated the list of losers on the Sensex. Bajaj Finance fell 5.8 per cent; IndusInd Bank fell 5.6 per cent; and SBI fell 4.6 per cent. Among the sectoral indices, realty and banking fell the most at over 3.6 per cent each.
Shares in the technology, metal and diagnostic space managed to buck the downward trend in the market.
Experts said investors would keenly eye how the Covid-19 situation panned out in the country. Besides, they will react to the upcoming Reserve Bank of India monetary policy and corporate results. The RBI’s Monetary Policy Committee is expected to maintain a dovish stance and keep key rates unchanged during its announcement on Wednesday.
“The earnings season is going to start and is likely to be good. But if the lockdown continues for a long time, the next quarter earnings may get impacted,” said Jaipuria.