A surge in COVID cases has spooked Indian markets as benchmark indices dropped as much as 3 percent on April 12.
Sensex is down 1,632.37 points or 3.29 percent at 47958.95, and the Nifty crashed 492.40 points or 3.32 percent at 14342.50.
The bloodbath on Dalal Street was led by a crash in banks and financial stocks as Nifty PSU Bank dropped over 8 percent. The top losers included State Bank of India, Punjab National Bank, Bank of Baroda, Bank of India and Indian Bank which fell 8-10 percent each.
Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities is of the view that the sharp depreciation in rupee against the dollar and fears of lockdown in few states where cases are rising very fast is leading to selling in the market. The Nifty50 and few of the larger constituents have given a breakdown which can lead to further correction in the market.
In worst case, Nifty50 can re-test the January 2021 low of 13,600 or go to 13,000. The likely strong earnings growth could restrict any major downside in the market going ahead. We expect strong YoY increase in earnings across all sectors with very high growth in case of automobiles, banks, metals & mining and oil & gas. We expect net profit of Nifty50 to increase by 122 percent YoY and 6 percent QoQ in Q4FY21, he said.
A mild single digit correction in Nifty50 should not cause any panic in the market. Going forward, India will remain a good buy on dips market as near-term headwinds may subside gradually and the earnings outlook may improve over the next 6-12 months, he added.
Private banks are also facing the heat with Bank Nifty hitting a 10-week low. RBL Bank and AU Small Finance Bank crashed 11 percent each followed by IndusInd Bank tumbling 8 percent. The other losers included Federal Bank, Bandhan Bank, ICICI Bank, HDFC Bank and Axis Bank.
"Since the second wave of the pandemic is turning out worse than expected, there is profound uncertainty about its impact on the economy and markets. Since the situation is the worst in economically significant Maharashtra, this can impact the market's assumption of around 11 percent GDP growth and above 30 percent earnings growth," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Nifty Financial Services was down 4 percent at 12:54 hours with the Bajaj twins including Bajaj Finance and Bajaj FInserv falling 4-7 percent each. The other losers included M&M Financial Services, Cholamandalam Investments, Indiabulls Housing Finance and Shriram Transport Finance Corporation.
"Nifty50 has failed to cross the resistance band of 14900 levels and broken down from its weekly doji candle last week. Key support of 32,400 in Bank Nifty has also led to a sharp fall across banking stocks and other sectors. The decision regarding imposition of a lockdown in Maharashtra is expected in the middle of the week and sharp surge in Covid cases across India which has lead to further weakness in index pivotal. There is a minor support at 14,270 levels being the March month lows and 100-day average, the breakdown will extend the fall to 14,000 levels," said Vikas Jain, Senior Research Analyst at Reliance Securities.
Manish Hathiramani, Proprietary Index Trader and Technical Analyst, Deen Dayal Investments is of the view that the resistance of 14950-15000 has worked once again, this time fiercely. The markets have taken a severe U-turn and have tested the 14300-14400 support. For the markets to move up, we need to respect this support range and bounce up. The level of 14264 was the recent low recorded and if we break that, the next expected level is 13900.Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.