Markets close on weak note: Sensex plunges over 880 points, Nifty cracks below 9,200-level; IT stocks among top losers

Weighed down by weak global cues, the India equity market made a Gap-down opening despite the government’s announcements on Wednesday evening to revive liquidity and the MSME sectors. Market players were disappointed as the immediate spend out of the government’s Rs 20 lakh crore fiscal stimulus package was seen to be relatively small, raising doubts about the revival of growth any time soon, experts said. The global markets are under pressure amid reports of reemergence of the second wave of coronavirus. The US Fed Chief statement that US economy may remain under pressure for longer time due to pandemic also downgraded investors’ sentiments. While the Indian market opened 1.8 percent lower, selling got accelerated with the passage of the session and it ended at a low point with the loss of 2.4 percent. A sharp selling in the last session also indicates that the market is expecting some disappoint from Finance Minister Nirmala Sitharaman’s second round of announcements post- market closing trading for the day.

#MarketAtClose | Market erases Wednesday’s gains with Sensex & Nifty slipping over 2% each; Sensex slips 886 points to 31,123 & Nifty 241 points to 9,143 with Nifty Bank declining 567 points to 19,069 & Midcap index falling 46 points to 13,018 pic.twitter.com/FcHL3cNAVc

— CNBC-TV18 (@CNBCTV18Live) May 14, 2020

Except for a few defensive sectors like FMCG and Pharma, all sectoral indices and broader indices ended in red. Investors will keep a close eye on the finance minister’s announcements today (Thursday). The Sensex plunged 886 points on Thursday, tracking heavy losses in index heavyweights Reliance Industries, HDFC twins, Infosys and ICICI Bank amid a selloff in global markets. Similarly, the broader NSE Nifty tanked 240.80 points, or 2.57 percent, to 9,142.75. [caption id=“attachment_8115511” align=“alignleft” width=“380”]  Representational image. News18[/caption] Tech Mahindra was the top laggard in the Sensex pack, cracking over 5 per cent, followed by Infosys, HDFC, IndusInd Bank, Reliance Industries and NTPC. On the other hand, Hero MotoCorp, L&T, Maruti, UltraTech Cement and Sun Pharma led the gainers’ chart. Sumeet Bagadia, Executive Director, Choice Broking told Firstpost, “Finally, the Nifty settled its closing 9,142-level with the loss of 240 points after giving a gap down opening. During the trading session, mostly we have seen selling pressure only and it seems that the ongoing movement may continue further as all the large cap constituents are trading on a lower level. “Furthermore, after Prime Minister Narendra Modi declared the meg rescue package, the market could not capitalise on the momentum and it started to fall from its recent high. At the present level, the index has strong resistance at 9,350-level, while downside good support comes at 9,100-level,” Bagadia said. Paras Bothra, President of Equity Research, Ashika Stock Broking, said, “Domestic markets opened sharply lower tracking weakness in global markets after Fed Chair Jerome Powell warned of a “significantly worse” US recession than any downturn since World War II because of coronavirus pandemic fallout. He, however, ruled out using negative interest rates as a tool for economic recovery. “Investors were also disappointed with announcements made by Finance Minister Nirmala Sitharaman to inject liquidity and improve credit flow. Markets eventually slipped further during the day led by strong selling across IT, bank and finance stocks,” Bothra said. Rupee settles 10 paise lower at 75.56 against US dollar The rupee slipped 10 paise to close at 75.56 (provisional) against the US dollar on Thursday, tracking weak domestic equities. Forex traders said market participants were concerned about the fiscal deficit concerns over the Rs 20-lakh-crore economic stimulus package as there is still no clarity on how the package would be financed. Moreover, investors are concerned over foreign fund outflows and the impact of coronavirus cases on the economy. The local unit opened weak at 75.57, and finally settled at 75.56 against the US dollar, down 10 paise over its previous close. It had settled at 75.46 against the US dollar on Wednesday. Domestic bourses were trading on a negative note with the benchmark Sensex falling 898.94 points to 31,109.67 and the broader Nifty down 228.15 points at 9,155.40. Foreign institutional investors were net sellers in the capital market, as they sold equity shares worth Rs 283.43 crore on Wednesday, according to provisional exchange data. Global stock markets drop for third day The head of the Federal Reserve quashed talk of US interest rates going negative to kickstart investment and new outbreaks of the virus in South Korea and China and some dour assessments of the global economy aroused concern too. Europe’s main bourses sank 1.5 percent in early moves as traders once again took shelter in safe-haven government bonds.

“The path ahead is both highly uncertain and subject to significant downside risks,” the Fed Chair Jerome Powell said of the economy, as he warned of a recession worse than any since World War Two.

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His suggestion that the Fed’s firepower may not be sufficient to avert deep damage also clearly spooked markets. He called for additional fiscal support but a $3 trillion stimulus bill seems to have run aground with senate Republicans for now, Reuters said. Asian markets had followed Wall Street lower overnight with MSCI’s broadest index of Asia-Pacific shares finishing down 1.3 percent and Japan’s heavyweight Nikkei closing 1.75 percent in the red. “We don’t think the market is going to re-test the lows, but it’s probably seen its best also, so I’m expecting a correction,” said Tony Huntley, chief investment officer at Melbourne-based fund manager Adansonia Capital. “The issue is whether we get a second wave (of coronavirus infections) … that would be my greatest fear.” China has re-imposed movement restrictions near its borders with North Korea and Russia after a new outbreak was detected there and South Korea is working to contain an outbreak centred around bars and nightclubs in Seoul. “It is important to put this on the table: this virus may become just another endemic virus in our communities, and this virus may never go away,” WHO emergencies expert Mike Ryan told an online briefing on Wednesday. Bonds and the dollar had both rallied after Fed Chief Powell talked down the prospect of negative interest rates in the United States. Yields on benchmark US 10-year Treasuries fell to 0.6185 percent having been 0.74 percent just over a week ago. European bond yields continued to fall for the most part too, despite more government spending which will ramp up debt levels. Italy’s government had unveiled its second fiscal package on Wednesday evening, worth 55 billion, or roughly 3 percent of its 2019 nominal GDP. Deutsche Bank now estimates that Rome’s debt-to-GDP level will hit an eyewatering 200% next year. “Swings in risk appetite after yesterday’s Powell’s cautious tones and more in general related to the developments of lockdown measures will remain an important driver,” UniCredit’s analysts said. -–With inputs from agencies