Sensex takes a U-turn ends 243 points lower, Nifty below 14,300

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Domestic equity benchmarks Sensex and Nifty erased early gains to finish with losses for the second day on the trot on Tuesday, as surging COVID-19 cases and growing localised restrictions continued to dent investor sentiment.

The BSE Sensex slipped 243 points or 0.51% to close the session at 47,705, and over a two-month low. Intra-day, the BSE gauge rose as much as 529 points to touch the day’s peak of 48,478.

Likewise, the NSE Nifty climbed over 167 points to reclaim the key 14,500-level during the day but surrendered all its gains to end at 14,296, showing a drop of 63 points or 0.44%.

On the Sensex chart, UltraTech Cement, HCL Tech, HDFC, Tech Mahindra, HDFC Bank and HUL emerged as the major laggards — falling as much as 4.70%.

On the other hand, Bajaj Finserv, Dr Reddy’s, Bajaj Finance, Bajaj Auto, M&M and Maruti were among the top gainers, climbing up to 3.70%.

Market analysts said a continued spike in fresh COVID-19 cases in the country and announcements of restrictions by several states have clearly dented investor sentiments and posed a threat to earnings recovery.

“Indian markets witnessed a bounce-back in its opening trade, however, failed to hold on to its early gains due to weak global cues and the possibility of a stricter lockdown in Maharashtra.

“Despite the vaccine drive kindling hopes of recovery, the trend in the market will depend on positive developments like decreasing COVID cases and lifting restrictions. IT and FMCG were the sectoral laggards while mid and small-caps outperformed,” said Vinod Nair, Head of Research at Geojit Financial Services.

In the broader market, BSE midcap and small-cap indices performed well to close with gains. But the largecap index followed the benchmark to finish lower.

Economy:

The Reserve Bank of India on 19 April said it has decided against activating the countercyclical capital buffer (CCyB) framework as the current situation does not warrant such an action.

The RBI had in February 2005 put in place CCyB guidelines with the overall objective of strengthening the banking sector. It was envisaged that the CCyB would be activated as and when the circumstances warranted.

Based on the review and empirical testing of CCyB indicators, it has been decided that it is not necessary to activate CCyB at this point in time, the RBI said in a release.

Global Markets:

European shares declined while most Asian stocks traded higher on Tuesday.

China kept its benchmark lending rate unchanged. On the economic data front, China kept its benchmark lending rate for corporate and household loans steady for the 12th straight month at its April fixing on Tuesday, matching market expectations. The one-year loan prime rate (LPR) was kept at 3.85%. The five-year LPR remained at 4.65%.

U.S. stocks slipped from record levels to start the week on Monday as weakness in the technology sector weighed on the broader market.

On the coronavirus front, White House chief medical advisor Dr. Anthony Fauci said he expects the U.S. will resume administration of the Johnson & Johnson vaccine. The Food and Drug Administration asked states last week to temporarily halt using the single-dose vaccine “out of an abundance of caution” after six women developed a rare blood-clotting disorder.