Tuesday, 13 April 2021 | PNS | New Delhi
Spooked by the grim Covid-19 scenario and slashing down of India’s growth outlook by multiple rating agencies, investors on Monday went for heavy selling of equity in banking, finance, and auto counters, triggering a huge collapse which saw Sensex crashing by over 1,707 points.
In more bad news on the economic front, India’s retail inflation rose to a four-month high of 5.52 per cent in March as food prices soared, according to the Government data released on Monday. The consumer price index (CPI)-based inflation was 5.03 per cent in the previous month (February 2021) and was 5.91 per cent in the same month last year (March 2020).
Food inflation accelerated to 4.94 per cent in March, as compared to 3.87 per cent in February. Inflation in “fuel and light” category remained elevated at 4.50 per cent during March compared to 3.53 per cent in February.
At the same time, the Index of Industrial Production (IIP) contracted 3.6 per cent for February 2021, showed data released by the Ministry of Statistics and Programme Implementation (MoSPI).
The industrial output contracted by 1.6 per cent in the previous month (January 2021) and expanded to 4.5 per cent in February 2020.
The manufacturing sector output contracted by 3.7 per cent in February, while the mining output declined by 5.5 per cent.
Meanwhile, the power generation grew by 0.1 per cent in February.
The stock market remained in the grips of bears throughout the day. In fact , Sensex plunged by over 1,700 points before it recovered marginally to settle 1,375.27 points or 4.61 per cent lower at 28,440.32. Similarly, the NSE Nifty fell 379.15 points, or 4.38 percent, to close at 8,281.10.
Bajaj Finance was the top laggard in the Sensex pack, tanking nearly 12 per cent, followed by HDFC, Tata Steel, HDFC Bank, ICICI Bank, Kotak Mahindra Bank and Maruti, which shed up to 10.92 per cent.
Only six Sensex constituents ended in the green, led by Tech Mahindra (4.94 percent), Nestle (4.49 percent), Axis Bank (2.50 percent) and HUL (2.19 percent).
News agency PTI quoted Narendra Solanki, Head- Equity Research (Fundamental), Anand Rathi, as saying, “Indian markets started the week on a negative note tracking volatile global cues in Asian markets as coronavirus-fuelled volatility gripped global equities and other financial markets, with oil prices seen plunging,” Fitch Solutions slashed its estimate for India’s GDP growth in the fiscal starting April 1 to 4.6 per cent due to weaker private consumption and contraction in investment amid the coronavirus outbreak, costing economies around the globe.
India Ratings and Research too revised its FY21 GDP growth forecast down to 3.6 percent from 5.5 percent.
The International Monetary Fund (IMF) had on Friday said the world has entered a recession as bad or worse than in 2009.
“As expected, the markets have set aside the stimulus measures announced by the RBI and the Government, and focused on the rising virus infections and its impact on the Indian economy.
“With a global recession already declared by the IMF, the recessionary forces and the general uncertainty are forcing investors, especially the FIIs, to redeem their investments. CPI for Industrial workers is due tomorrow, although it is unlikely to have an effect in the current market scenario,” said Vinod Nair, Head of Research at Geojit Financial Services.
BSE realty, finance, bankex, auto and telecom indices tumbled up to 7.01 per cent, while healthcare and FMCG ended with gains.
Broader BSE midcap and smallcap indices fell up to 2.13 per cent. Global equities notched up losses as investors assessed the economic damage from the virus pandemic.
Bourses in Shanghai, Hong Kong, Tokyo and Seoul ended in the red. Benchmarks in Europe were also trading on a negative note. International oil benchmark Brent crude fell 4.47 percent to USD 26.70 per barrel in futures trade.
On the currency front, the rupee depreciated 65 paise to 75.54 against the US dollar in intra-day trade.