The Sensex declined 740 points, or 1.5 per cent, to close at 48,440.12 on Thursday. The Nifty fell 224.5 points, or 1.5 per cent, to 14,324.90. Both indices nearly pared losses midway through the session due to a recovery in banking and metal stocks but slipped after a fresh bout of selling.
The daily count of coronavirus cases in India has crossed 50,000 for the first time in five months. While overseas investors have stepped up selling of local stocks on account of rising infections, a strengthening dollar and elevated bond yields in the US, the cautious sentiment is reflected in the shrinking premiums of soon-to-be-listed companies in the unofficial grey market.
“It is Covid cases primarily weighing down markets, but since the time US yields have started rising, there is tapering of FII (foreign institutional investor) flows also,” said Piyush Garg, chief investment officer at ICICI Securities. “Some bit of liquidity can get withdrawn as the dollar is rising.”
On Thursday, foreign portfolio investors (FPIs) sold shares worth a net Rs 3,384 crore, while their domestic peers were buyers to the tune of Rs 2,268 crore. India VIX, which measures the market’s perception of risk in the near term, rose 1.1 per cent to 22.70. Maruti Suzuki India, Hindustan Unilever, Bharti Airtel, Bajaj Auto, and NTPC had the biggest declines on the Sensex, ending down 3-4 per cent.
With this fall, stock indices are down about 7.5 per cent from record highs on February 16 after almost doubling since March 24 last year when Sensex and Nifty hit a four-year low.
“It is more about market having run up a lot,” said A Balasubramanian, CEO, Aditya Birla Sun Life Mutual Fund. “Increased cases of Covid are happening but increased vaccination is also happening. I don’t think that will be a big concern for the market going ahead.”