Reports of new coronavirus cases stalls domestic market's revival

The recovery in domestic indices was short-lived after the health ministry reported new cases of coronavirus, taking the total number of infections in the country to 28.
 
While the benchmark indices ended with losses, most global markets extended gains as investors focused on the global policy response to the virus outbreak, and a surprise comeback for Joe Biden in the US presidential primary.
 
The Sensex, after briefly trading in the green, slumped as much as 800 points (2 per cent). Stocks managed to recoup losses in the last hour of trade as US futures indicated a strong opening on Wall Street.
 
The Sensex settled at 38,409, down 214 points or 0.6 per cent. The index has now ended with losses in eight of the previous nine sessions. Since February 19, it has declined 2,914 points or 7 per cent.
 
The Nifty closed at 11,254, down 49 points or 0.43 per cent.
 
Harsh Vardhan, Union health minister, said on Wednesday that 14 Italian tourists and their Indian driver had tested positive, taking the total number of people infected in the country to 28. Globally, infections rose above 93,000, with the death toll rising to 3,201.
 

Market players said the outbreak in India was worrying, given the country is densely populated. If not contained, it could have a significant impact on the domestic consumption-driven economy, which is already under significant pressure.
 
“India, which had so far remained largely unaffected, is now seeing cases rise, which has dampened sentiment. This event has introduced an additional downside risks to our earnings estimates for FY21. Overseas flows could also add to volatility,” said Siddhartha Khemka, head (retail research), Motilal Oswal Financial Services.
 
Foreign investors have pulled out close to $2 billion from the domestic markets in the past fortnight.
 
On Tuesday, the US Federal Reserve announced its first emergency rate cut since the 2008 financial crisis, slashing policy rates by half a percentage points.
 
“The recent surge in cases outside China has spooked investors across the globe. Monetary measures by various central banks are going unnoticed. Markets are currently witnessing a roller-coaster ride, and we do not see this ending anytime soon,” said Ajit Mishra, vice-president (research) of Religare Broking.
 
Barring three, all BSE sectoral indices ended in the red. Banking and finance stocks were worst-hit, with their respective gauges falling 1.7 and per 1.6 cent each. 
 
Nineteen of Sensex components ended with losses. IndusInd Bank, Bajaj Finance, and ITC were the worst-performing Sensex stocks and fell 3.9 per cent, 3.8 per cent and 3.3 per cent respectively.