Volatility has gripped Indian benchmark indices as markets are being weighed down by worries of localised lockdowns, which would further slowdown economic recovery.
On Tuesday, Sensex plunged over 1,000 points from day’s high to hit a low of 47,438 during intra-day trade, while NSE’s 50-share index hit a intraday low of 14,207 before settling at 14,296 levels, down 63 point s or 0.44 per cent. About 27 of the 50 constituents ended the day in red. Sensex, too, staged a mild recovery to close at 47,706, down 244 points or 0.5 per cent.
What’s troubling investors is the rapid rise in Covid-19 infections, prompting state governments to impose curfews restricting economic activity. While Maharashtra tightened norms allowing shops to stay open only between 7 am and 11 am, Telangana imposed night curfews, Jharkhand and Delhi announced a complete lockdown for a week.
In fact, such localised restrictions or even the slightest prospect of such instances is irking investors worldover. Japanese shares too fell by their most in a month on Tuesday fearing restrictions, with only one of the Tokyo Stock Exchange’s 33 industry sub-indexes closing higher. Similarly, Sri Lankan shares too fell for a third straight session weighed by a slump in industrial and financial stocks. In contrast, South Korean stocks closed at an all-time high as a weaker dollar spurred foreign buying ahead of earnings from carmakers and tech firms.
Both the currency (won) and the benchmark bond yields rose. The uncertainty hasn’t spared even the dollar, which dropped to its lowest in nearly seven weeks during the Asian session on Tuesday. The greenback fell so far in April as US bond yields retreated from the 14-month highs touched last month. The moves are a reverse to what happened in Q1, when the dollar strengthened as US Treasury yields rose offering higher returns.
Indian rupee weakened sharply crossing 75 levels against the dollar this month and experts believe it could go further to 76 levels. The steady decline forced the US Treasury to put India along with 10 other economies including Singapore, Thailand and Mexico on the Monitoring List needing close attention to their currency practices. However, India maintained that it doesn’t see any logic in the US’ action.