Fresh Covid-19 curbs in Europe and uncertainty over a fiscal stimulus in the US hurt investor sentiments on Monday, driving down Indian markets by more than 1%. The BSE Sensex ended at 40,145.50, down 540 points or 1.33%, while the Nifty closed at 11,767.75, down 162.60 points or 1.36%.
Global markets remained weak, as Spain declared a national emergency and curfew, and Italy tightened restrictions amid rising Covid-19 cases. The US also continues to report record infections.
Volatility spiked as investors remained concerned about the spreading infection. India volatility index or VIX jumped 4.6%, closing at 22.83 on Monday.
Vinod Nair, head of research, Geojit Financial Services, said, “Volatility is expected as we are nearing the US election date. Prices are high, which limits the capacity of the market to handle uncertainties, though the final outcome of the election is unlikely to change the long-term trend of the global market. Rising Covid cases in the US and Europe, and the delay in US stimulus has added to the worries. Indian markets are taking a correction from the recent rally, which has factored in a lot about an uptrend in earnings growth due to positive Q2 results.”
The sell-off in index heavyweight Reliance Industries Ltd also added pressure on the benchmark indices, as investors feared the company may not be able to complete the acquisition of Future Group assets, since a Singapore arbitration panel has put the deal on hold.
“Going ahead, the market is likely to remain in a tight range, taking cues from the ongoing results season, developments around the US elections and Covid cases globally,” Siddhartha Khemka, head-retail research, Motilal Oswal Financial Services Ltd said.
After the RBI’s October Monetary Policy Committee (MPC) meeting minutes suggested that most members remain concerned about the growth outlook, investors are hoping for another interest rate cut.
“We expect the RBI MPC to cut rates as inflation peaks off to its 2-6% mandate. Our base case has a 50 basis points cut in December and 25 bp cut in February as inflation falls to 5% levels in November and 2.8% in February,” analysts at BofA Securities said. One basis point is one hundredth of a percentage point.
Meanwhile, Kotak Mahindra Bank on Monday beat estimates to clock a September quarter net profit of ₹2,184 crore, up 26.7% from a year ago, aided by higher income and lower provisions.
Last year, the bank had recorded a net profit of ₹1724.48 crore in the same quarter. This quarter’s earnings beat the median figure of ₹1,340 crore net profit estimated in a Bloomberg analysts’ poll by a wide margin. On a day the benchmark Sensex index fell 1.33%, shares of Kotak Mahindra Bank closed 2.36% higher, making it India’s second-largest bank by market value, beating ICICI Bank Ltd.
Gopika Gopakumar contributed to this story.
Read More: Markets skid over 1% as Covid cases spike – business news