Bears grip markets after two sessions of bullish show: Sensex, Nifty end on negative note; all sectoral indices close in red

Bears again gripped the market after two sessions of bullish show as optimism was downgraded by two crucial domestic events include first low response to RBI TLTRO 2.0 and second close down of 6 debt mutual funds scheme by Franklin Templeton amidst liquidity issue.

Many retail investors and high net worth individuals (HNIs) who invested in these schemes as part of their fixed-income asset allocation will be hit as the money will be blocked with no clear timeline for recoveries, experts said.

As against Rs 25,000 cr offered, the RBI got bid for Rs 12,850 cr which indicates that Indian banks are still reluctant to lend to small and micro NBFCs.

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The markets ended with a decline of 1.7 percent and all sectoral indices ended in red except pharma index. Banking, metals and realty stocks remained under pressure.

Bajaj Finance was the top laggard in the Sensex pack, dropping over 9 percent, followed by Axis Bank, IndusInd Bank, HDFC, ICICI Bank and M&M. Reliance Industries, however, capped the losses by rallying over 3 percent. Britannia and Cipla were also among the top gainers. Going ahead market is expected to remain volatile on concerns over economic damage due to pandemic.

The benchmark indices ended on negative note after a volatile session on 24 April. This was after two days of gains. The 30-share BSE Sensex settled 535.86 points or 1.68 percent down at 31,327.22. The Nifty closed down 159.50 points or 1.71 percent at 9154.40. For the week, the index was down 0.8 percent, its first weekly drop after gaining for back-to-back weeks.

Global shares fell on Friday, spurred by delays to an agreement on divisive details of the European Union's stimulus package and doubts about progress in the development of drugs to treat COVID-19. Financials and metal shares came under selling pressure while select pharma stocks were bought.

Representational image. Reuters

Deepak Jasani, Head Of Research, HDFC Securities said: "Technically, with the Nifty correcting today, traders will need to watch if the Nifty index can now hold above the immediate supports of 8946-8908 early next week for the bulls to regain control. Else, the Nifty could resume its intermediate downtrend. On up moves, 9,314 can provide resistance.

The market went into selloff mode as winding up of a few debt schemes by Franklin Templeton added to the selling pressure witnessed in banks and NBFC stocks, said experts.

According to Sanjeev Zarbade, VP PCG Research, Kotak Securities, markets across the globe remained volatile as the wait for a credible breakthrough in medicine to remedy the COVID-19 pandemic remained elusive. Weak macroeconomic data in most countries and rout in oil prices also hit investor sentiment, he said to PTI.

The death toll due to the pandemic rose to 718 in India, while the number of cases climbed to 23,077. Global tally of the infections has crossed 27 lakh, with over 1.90 lakh deaths.

Rupee slips 40 paise to settle at 76.46 against dollar

The rupee depreciated by 40 paise to settle at 76.46 (provisional) against the US dollar on Friday, tracking weak domestic equities and a strengthening greenback overseas.

Forex traders said market sentiment weakened after a potential antiviral drug for coronavirus reportedly failed its first trial.

The rupee opened lower at 76.30 at the interbank forex market and then fell further to 76.47 and finally closed at 76.46, down 40 paise over its last close.

The rupee had settled at 76.06 against the US dollar on Thursday.

The dollar index, which gauges the greenback's strength against a basket of six currencies, advanced by 0.31 per cent to 100.74.

Market participants are concerned that the sharp rise in coronavirus cases could weigh on the global as well as domestic economy.

The number of coronavirus cases around the world has crossed 27 lakh. In India, over 23,000 cases have been reported so far.

"Any piece of bad news regarding coronavirus, rattles the risky assets including rupee and we see it breaching fresh record lows," Emkay Global Financial Services Head of Research-Currency Rahul Gupta said to PTI.

Gupta further noted that "all this while, investors were hoping on flattening coronavirus cases and progress of a vaccine, but now there are doubts in the development of drugs. This uncertainty will continue to fickle the forex market".

After hitting a low of 31,278.27, the benchmark Sensex was trading 489.42 points or 1.54 per cent down at 31,373.66 in the afternoon session.

Similarly, the NSE Nifty declined 145.45 points, or 1.56 per cent, to 9,168.45.

In USD/INR spot 75.70-75.75 has been acting as a crucial support, and will remain the same, going ahead we may see prices breach 77-77.15 level, he further noted.

Global shares fall as Wall St rally fizzles amid virus fears

Global shares extended losses Friday as hopes faded for a quick turnaround for the global coronavirus pandemic.

France's CAC 40 dropped 1.9 percent in early trading to 4,368.03, while Germany's DAX fell 1.8 percent to 10,321.87. Britain's FTSE 100 shed 1.5 percent to 5,741.36. US shares were poised for losses, with the future for the Dow industrials down 0.3 percent at 23,272.50. The future contract for the S&P 500 lost 0.4 percent to 2,771.12.

Investor sentiment was again fragile as attention shifted to the economic damage the world is likely to suffer because of the pandemic, says Prakash Sakpal and Nicholas Mapa, economists at ING.

A report from the Financial Times that said an antiviral drug failed to improve conditions in patients in a Chinese clinical trial cast a shadow over hopes it might turn out to be a potential treatment for coronavirus patients.

The report cited documents published accidentally by the World Health Organization. Researchers said the sample size was too small to draw scientifically valid conclusions and the trial ended early.

The Foster City, Calif.-based company behind the drug, Gilead Sciences, said the data represented “inappropriate characterizations” of the China study.

“Investors will continue to be monitoring developments on the COVID-19 front with a setback on clinical testing for a treatment to the virus. Meanwhile, the U.S. passed a fresh round of stimulus while oil prices continued to inch up slightly,” they said in a commentary.

Market players are also focusing on upcoming policy meetings at the Bank of Japan, the Federal Reserve and the European Central Bank for signs of what they may say about the state of global economies that appear on the brink of collapse.

Japan's benchmark Nikkei 225 slipped 0.9 percent to finish at 19,262.00. South Korea's Kospi lost 1.3 percent to 1,889.01, while Australia's S&P/ASX 200 climbed 0.5 percent to 5,242.60. Hong Kong's Hang Seng fell 0.6 percent to 23,831.33, while the Shanghai Composite lost 1.1 percent to 2,808.53.

In India, the Sensex lost 0.5 percent to 31,689.62. Shares fell in Taiwan and Southeast Asia.

Toyota shares slipped 0.4 percent in Tokyo after the Japanese automaker said vehicle production will be gradually ramped up in North America from 4 May. Toyota Motor Corp., like many other automakers, have halted production around the world.

US benchmark crude shed 69 cents to $15.76 a barrel in electronic trading on the New York Mercantile Exchange. It rose 19.7 percent to settle at $16.50 a barrel.

It has recovered after falling below $12 Monday, though it remains well below the roughly $60 level where it began the year. Brent crude, the international standard, gave up 51 cents to $24.28 a barrel.

The dollar inched up to 107.71 Japanese yen from 107.50 yen Thursday. The euro inched down to $1.0747 from $1.0777

--With inputs from agencies