A rise in coronavirus infections in some parts of the country that has triggered fears of another wave spooked investors, as the equity barometer Sensex declined more than 1,100 points on February 22.
At close, the Sensex was 1,145 points, or 2.25 percent, down at 49,744.32, while the Nifty ended 306 points, or 2.04 percent, lower at 14,675.70.
The overall market capitalisation of BSE-listed firms dropped to Rs 200.26 lakh crore on February 22 from Rs 203.98 lakh crore in the previous session, making investors poorer by Rs 3.7 lakh crore in a single day.
This was the biggest single-day fall for the Sensex since December 21, 2020, when the market benchmark closed with a loss of 1,407 points.
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Since 2015, there have been 18 occasions when the Sensex fell more than 1,000 points. The biggest single-day fall for the 30-pack index since 1979 was on March 23, 2020.
Experts attributed the February 22 fall to a surge in COVID-19 cases. Active cases continued to rise for the fifth consecutive day, with an increase of 4,421 infections to 1,50,055 on February 22. Maharashtra and Kerala account for the bulk of new cases.
Maharashtra has announced a fresh set of restrictions, with lockdown, night curfews and closure of schools and colleges in some parts of the state.
Rising global bond yields indicate that the market is worried about inflation. It is also making equity valuations appear stretched in comparison.
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As Moneycontrol reported, in developed markets, including the US, the UK and Japan, bond yields are close to a one-year high. A combination of factors including the recovery, a spate of fiscal and monetary stimulus and rising fears of inflation have contributed to the rising yields.
In India, too, bond yields have been on the rise despite the Reserve Bank of India’s intervention.
"Rising economic restrictions from the spike in virus cases and weak global cues hit the domestic market sentiment. FPI inflows, which was leading the rally, slowed down due to global vulnerabilities from rising bond yield and inflation," said Vinod Nair, Head of Research at Geojit Financial Services.
This is a buy-on-the dip market, Nair said. "A short-term correction will trigger new buying, as economic fundamentals have improved, with more focus on industrial and cyclical," he said.Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.