MUMBAI: Disappointing stimulus measures, along with high prices and risk to economic recovery due to he rising Covid infection rate, dragged the Indian equity market deep into the red on Thursday.
The Indian benchmark indices fell sharply after a 10 day up move and in the process erased nearly 40 per cent of the gains.
At close of the day's trade, both NSE Nifty50 and S&P BSE Sensex were down more than 2.40 per cent each.
Globally, European stocks slumped on Thursday, with investors concerned about the impact of a second wave of coronavirus on the economy without any imminent stimulus to cushion the blow. Back home, volumes on the NSE were just above the recent average with all sectoral indices closing in the red.
The Sensex closed at 39,728.41, lower by 1,066.33 points, or 2.61 per cent, from its previous close of 40,794.74.
The Nifty50 on the National Stock Exchange closed at 11,680.35, lower by 290.70 points, or 2.43 per cent, from its previous close.
"In India, we additionally had reports of a MFI defaulting on debt servicing due to internal fraud and a financial service firm facing forensic audit directed by the regulator," said Deepak Jasani, Head of Retail Research at HDFC Securities.
"The Nifty, after so many attempts, has failed to go above the January high of 12,431. A large bear candle at the top could result in more weakness if Nifty does not stop falling in the next 1-2 days. On falls, the Nifty could take support in the 11,522-11,605 band." According to Vinod Nair, Head of Research at Geojit Financial Services: "The market had moved up in expectation of a big stimulus, but the desired fiscal package was not announced in India and a delay of it in the US and Europe has changed the trend."
"At the same time, the pace of economic recovery is under stress because of a resurgence of high rates of Covid infection, mounting to high economic restrictions. The margin of safety is low given premium prices and slowdown in economic recovery. The trend going forward will depend on the supportive measures announced in context to stimulus and commentary of Q2 results," he said.
Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services said: "Global cues were weak as fresh Covid concerns and fading hopes for more US fiscal stimulus before the presidential election weighed on the market sentiments."
"On the domestic side, IT and Banking stocks lead the decline which were outperformers of the rally seen in the last 10 trading sessions," he said. He added that Moody's statement that India's second round of stimulus will provide very limited support to growth during these times also dampened sentiments. (IANS)
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