Concern over rising COVID-19 cases in the country seems to be weighing on D-Street sentiment leading benchmarks Sensex and Nifty to shed over a percent each in intraday trade on March 24.
The 30-share pack Sensex fell almost 800 points and Nifty fell below 14,600 in intraday trade.
At 1210 hours, Sensex was 670 points, or 1.34 percent, down at 49,381 while Nifty was at 14,613, down 202 points or 1.36 percent.
Among the sectors, Nifty Metal and Realty fell up to 3 percent each while bank, auto and financial services indices fell up to 2 percent.
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Here are 5 key factors that could have led to the market fall:
1. Sharp jump in COVID-19 cases
Rising COVID-19 cases are posing a serious threat to the economic recovery of the world.
“The sudden surge in Covid cases, globally, is a cause for concern. Markets had discounted sharp recovery in global GDP growth in 2021. But now, with parts of Germany, France & Italy going through the third wave and regional lockdowns, global GDP growth is likely to be below estimates,” VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services pointed out.
“The recent crash in crude is a reflection of reduced demand emanating from declining economic activity. In India, the second wave in some prominent cities is adding to the concern,” Vijayakumar added.
India reported 275 new COVID-19 deaths on Wednesday, the most this year, as a second surge in cases fills up hospital beds in big states such as Maharashtra.
Infections rose by 47,262 in the past 24 hours, the highest since early November, to a total of 11.7 million, data from the health ministry showed.
India has recorded the most number of cases after the United States and Brazil. Total deaths have shot up to 160,441 in India.
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2. Geopolitical concerns
Geopolitical developments are also influencing the mood of the market. As per a Reuters report, North Korea fired two short-range missiles at the weekend, US and South Korean officials said, but Washington played down the first such tests under President Joe Biden and said it was still open to dialogue with Pyongyang.
The test came after North Korea refused to engage with repeated behind-the-scenes US diplomatic overtures by the new administration since mid-February.
3. Weak global cues
Most major Asian markets traded in the red amid reports of lockdowns in Europe and a potential tax hike in the US.
As Reuters reported, Asian shares hit a two-week low on Wednesday, oil weakened further and the dollar neared four-month highs as coronavirus lockdowns in Europe and potential US tax hikes hit risk appetite, leading to a flight to safety.
4. Profit booking in banks
Most banking stocks logged healthy gains on March 23 after the Supreme Court refused to grant interest waivers and extend the moratorium period.
However, today a fresh wave of profit-booking was witnessed in banking stocks such as ICICI Bank, HDFC Bank, Axis Bank, Kotak Mahindra Bank and SBI which dragged the benchmark index lower.
5. Nifty finds strong resistance in the 14,750-14,900 zone
Nifty has strong resistance in the zone of 14750-14900 and unless it breaks this zone convincingly, the market may remain rangebound, according to experts.
“The Nifty is currently in a zone of resistance where a trend is expected to emerge. The zone is between 14,750-14,900. If we are unable to get past this patch we could turn from here and resume the current downtrend. That could lead us to levels closer to 14,400. If the market can sustain above 14,900, the index could endeavour a move to 15,300,” said Manish Hathiramani, Proprietary Index Trader and Technical Analyst, Deen Dayal Investments.
As per Chandan Taparia, Vice President and Derivatives Analyst at Motilal Oswal Financial Services, Nifty has to hold above 14,750 to witness an up move towards 14,900 and 15,000 while on the downside, immediate support exists at 14,700 then 14,600.
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