Indian shares tanked, with the BSE Sensex reporting the second biggest single-day fall on April 12 as yet another record-breaking daily surge in coronavirus cases spooked investors, worried about the economic recovery.
More states have tightened restrictions and some, including economic powerhouse Maharashtra, are considering lockdown, as India's daily cases almost touched 1.7 lakh, worrying investors.
The BSE Sensex was down 1,707.94 points, or 3.44 percent to 47,883.38, while the Nifty50 fell 524.10 points, or 3.53 percent, to 14,310.80 as selling was seen across sectors.
The 30-pack Sensex reported its biggest single-day fall on February 26, 2021 and third biggest single-day fall witnessed on April 5, 2021. Data shows that the benchmark index had already corrected more than 1,000 points five times in the current calendar year.
The broader markets were worst hit. The Nifty midcap 100 and smallcap 100 indices were down more than 5.5 percent.
Also read: What to shop after sharp Sensex fall: 8 buy ideas from experts
This was to be the recovery period for the economy as infections had been declining and growth was picking up but the second wave has hit India hard and investors are worried about the growth as it may take another two-three months to control the spread with vaccination and restrictions, experts say.
Also read: Coronavirus Update | India added over 9 lakh new COVID-19 cases in the past week
"We expect that for the next six months, the Indian economy may progress in fits and starts, and the relatively slow progress of vaccination in India means that we will be slower to recover compared to the US," R Venkataraman, MD at IIFL Securities said.
Nifty bank, auto, financial services and metal indices were hit the hardest, falling 5-6 percent, while FMCG and IT indices were down 2 percent.
Also read: Sensex, Nifty crack up to 3%; 5 factors that are spooking investors
Tata Motors, Adani Ports, IndusInd Bank, Hindalco Industries, Bajaj Finance, SBI and UPL were the biggest losers among Nifty50, correcting 5-10 percent.
The selling in the economy-related stocks indicates that the impact of the second wave could be greater than expected. Experts advise buying quality stocks on dips as vaccination would limit the virus spread.
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"We would like to buy dips. We would like to emphasize IT, exporters (chemicals), global cyclicals (strong beneficiaries not only of high commodity prices but also INR depreciation), and insurance (a steady Eddie)," Venkataraman said.
"We also like private banks as they should see loan growth acceleration, lower NPAs than currently provisioned for and benefits from higher interest rates as high US yields pull up Indian yields. We would be underweight domestic cyclicals like cement and pricey sectors like FMCG/Paints etc," he added.
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