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Covid surge, bond yields rise pull equity down, IT stocks sink
Mumbai, March 31, 2021
Fears over re-imposition of movement restrictions to curb the rise in Covid infections, along with a massive surge in US Treasury yields, pulled India's key stock markets lower on Wednesday.
Globally, investors were spooked into selling tech-related growth shares after the US Treasury yields hit a 14-month high.
Besides, major moves were restricted before US President Joe Biden's speech unveiling a new $3 trillion infrastructure plan as part of his "Build Back Better" agenda.
Further, OPEC+ countries were scheduled to meet on Thursday amid concerns about extended lockdowns in Europe and volatile oil prices throughout March leaving investors concerned.
On the domestic front, a surge in India's Covid-19 cases and fear of restrictions on movement added to the subdued atmosphere.
Among sectors, private banks were the worst-hit, followed by IT, infra, energy and auto whereas pharma, consumption, metals, PSU banks, realty and FMCG were the few sectors that closed in green.
Consequently, the S&P BSE Sensex closed lower by 627.43 points, or 1.25 per cent, at 49,509.15 points from its previous close.
The NSE Nifty50 on the National Stock Exchange traded at 14,690.70, down by 154.40 points, or 1.04 per cent, from its previous close.
"Indian markets snapped two-day rising streak and ended with losses. Major Asian, as well as European markets, also had a muted session," said Devarsh Vakil- Deputy Head of Retail Research at HDFC Securities.
"Broad market indices like the BSE midcap and smallcap indices ended higher, thereby out-performing the benchmark indices like Nifty and Sensex. Realty, FMCG, and CD indices were the top gainers. Immediate support to watch for Nifty is now at 14,617."
According to Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services: "Technically, Nifty formed a 'Bearish' belt hold sort of a candle and also formed an 'Inside Bar' as it traded inside the trading range of the last session. Now, it has to cross and hold above 14,750 zones to witness an up move towards 14,900- and 15,000-zones while on the downside support exists at 14,600 and 14,500 levels."
"Indian markets are likely to track global cues in this truncated week of trade. Also with the financial year ending, investors would now focus on upcoming quarterly results which would kick start from mid-April. Domestically, concerns over the fast spreading second wave of covid in India continues to remain and the fear of possible lockdowns prevail. Overall markets are likely to remain in a consolidative mode for some time awaiting for fresh positive triggers."
In addition, Vinod Nair, Head of Research at Geojit Financial Services said: "Weak cues from across the globe forced the domestic market to shed yesterday's optimism. US markets had a weak close after the US bond yield reached near its 14 month high level while European and Asian markets followed the trend."
"Private banks were the sectorial laggards due to selling seen in heavy-weights. However, mid cap and small cap stocks remained in positive territory today."