Global markets wary over US inflation figures while India suffers a loss of 4,205 lives in 24 hours
The Indian equity markets opened in the red on Wednesday with the BSE Sensex down over 400 points with the index movers trading in the loss amid rising Covid crisis and subdued global cues. The pandemic took a record toll of 4,205 lives in the country in the last 24 hours.
The 30-share BSE index was trading 403.16 points or 0.82 per cent lower at 48,758.65 in the early trading hours, while the broader NSE Nifty falling 112.80 points or 0.76 per cent to 14,737.95.
HDFC was the top loser in the Sensex pack, shedding over 2 per cent, followed by M&M, Hindustan Unilever, Nestle India, Tech Mahindra and ICICI Bank. On the other hand, PowerGrid, NTPC, L&T, SBI and ONGC were among the gainers in the opening hours of trade.
The Sensex ended Tuesday’s trade 340.60 points or 0.69 per cent lower at 49,161.81, and Nifty slumped 91.60 points or 0.61 per cent to close at 14,850.75. Foreign institutional investors (FIIs) were net sellers in the capital market as they offloaded shares worth Rs 336 crore on Tuesday.
Experts had predicted volatile movement in the markets as the second Covid wave continued to rampage the country. According to the health ministry, India registered a single day spike of 3,48,421 Covid-19 infections on Wednesday, taking the tally to 2,33,40,938. The record 4,205 fatalities raised the death toll to 2,54,197.
Despite the gloom, there is a silver lining that makes experts feel that the second wave is on the wane. The active cases have reduced to 37,04,099, comprising 15.87 per cent of the total infections, while the national Covid-19 recovery rate has improved to 83.04 per cent, the ministry said. The number of people who have recuperated from the disease surged to 1,93,82,642, while the case fatality rate was recorded at 1.09 per cent, the data stated.
While grappling with the Covid woes, the markets are caught between two opposing forces – the positive force of economic recovery and the negative drag of inflationary pressures. According to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the market trend now will depend on which of the two forces triumphs over the other.
The year-on-year inflation in the US is expected to come around 3.6 per cent, pushed mainly by the base effect and therefore may not sustain. But if the month-on-month inflation data shows a surge, the dovish Federal Reserve will be forced to take it seriously. The fact that the market is a bit apprehensive of rising inflation is reflected in the US 10-year yield rising above 1.6 per cent, he said.
“In India, the fourth quarter results continue to be good with better-than-expected performance from mid and small caps. Market action is likely to be stock specific based on results,” Vijayakumar noted.
Most Asian markets retreated on Wednesday with investors looking ahead to US data amid rising fear of inflationary woes. Shanghai, Tokyo and Southeast Asian markets declined, while Hong Kong advanced.
Wall Street’s benchmark S&P 500 index lost 0.9 per cent amid concern that inflation might accelerate, hampering the economic recovery and dragging on share prices. More US inflation were due out Wednesday. Investor concern is increasing following a price rise for industrial materials including copper and crude oil.
“Asian equities traded sideways following a lacklustre session on Wall Street, where risk sentiment prevailed amid inflationary concerns,” Anderson Alves of ActivTrades said in a report. This week’s data are “essential for investors worldwide as the US markets are the primary benchmark for risk assets globally”.
The market slump weighed on the Indian currency with the rupee shedding 17 paise to trade at 73.51 against the US dollar in the opening hours on Wednesday.
Indian market participants also need to keep an eye on domestic inflation and industrial production data, scheduled to be released later in the day, traders said.