Sensex plunges 1,000 points on COVID fears, fading stimulus hopes

Sensex plummets 1,066.33 points to end at 39,728; Nifty tanks 290.70 points to 11,680

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Riding a global wave, benchmark indices Sensex and Nifty went on a southward spiral on Thursday amid selloff in IT and financial stocks. At close, Sensex plummeted 1,066.33 points to end at 39,728.41, while Nifty tanked 290.70 points to 11,680.35. 

Reliance Industries (RIL), Infosys, HDFC Bank and TCS were the biggest drags on the Sensex, together accounting for a loss of more than 400 points in the index. HCL Tech, Tech Mahindra, Bharti Airtel, Bajaj Finance and Infosys, trading between 2.60 per cent and 3.76 per cent lower, were the worst hit among 32 laggards in the Nifty basket of 50 shares. On the other hand, Tata Steel, Hero MotoCorp, Hindalco and JSW Steel, up 1.15-2.52 per cent each, were the top gainers in the index.

Twenty nince of 30 Sensex stocks end the day in the red as the plunge pared a rally that lasted 10 straight days. According to analysts, profit-booking in IT stocks, which drove most of the recent rally, dragged the markets lower. 

The performance of the Indian equity markets is an extension of decline in global stock markets and US futures as hopes US leaders will agree on new economic aid before the November 3 presidential election faded.

London and Frankfurt opened lower. Shanghai, Tokyo and Hong Kong also declined.

Wall Street's benchmark S&P 500 index dropped 0.7 per cent on Wednesday after Treasury Secretary Steven Mnuchin said he and congressional leaders were “far apart” on new aid for the struggling US economy. Consumer spending, the main US economic engine, weakened after earlier additional unemployment benefits expired.

According to Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd: “Indian equity markets snapped 10-day winning streak, erasing nearly 40% of the gains seen in previous 10 sessions. Nifty fell 291 points lower (-2.4%) to close at 11,680, while Sensex plunged 1066 points (-2.6%) to end at 39,728. The broader market also fell in tandem with Nifty Midcap 100/Nifty Small Cap 100 down -1.7% each. India VIX jumps 9.1% to 22.1 levels. All the sectors ended in red, with Banks (-3.4%), Financials (-3.0%), and IT (-2.9%) being the biggest losers.

Global cues were weak as fresh COVID concerns and fading hopes for more US fiscal stimulus before the presidential election weighed on the market sentiments. European markets fell for third consecutive session as Governments across Europe have tightened restrictions to curb an accelerating second wave of COVID-19 infections. On the domestic side, IT and Banking stocks lead the decline which were outperformers of the rally seen in the last 10 trading sessions. Further Moody's statement that India's second round of stimulus will provide very limited support to growth during these times dampened sentiments.

Prasanna Pathak, Head - Equity & Fund Manager attributed four factors to today's crash: The probability of US stimulus getting pushed after Presidential election, concerns about Trump's prospects in the elections, the second round of lockdowns starting in key European countries, monthly expiry and position.

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