Bears on the rampage as U.S.-China spar

BSE, Nifty plunge deep into red; poor corporate earnings depress sentiment; volatility index rockets

A mix of global and domestic factors pulled down the Indian equity benchmark indices on Monday, snapping a four-day gaining streak as well.

Market participants attributed the drop to the overall weak trend in global markets as the U.S. and China engaged in a fresh spat after the former threatened fresh tariffs while alleging that COVID-19 originated in a China lab.

On the domestic front, the 14-day extension of the lockdown dampened investor sentiments that was already subdued on account of weak corporate earnings by heavyweights such as Hindustan Unilever, and Reliance Industries

The 30-share Sensex lost a whopping 2,002.27 points, or 5.94%, to close at 31,715.35. As many as 28 of the 30 constituents of the benchmark ended deep in the red on Monday.

Stocks such as ICICI Bank, Bajaj Finance and HDFC lost more than 10% each while IndusInd Bank, Axis Bank, HUL, Reliance Industries, Tech Mahindra, Infosys and State Bank of India, among others, also declined. In the broader market, more than 1,800 stocks lost ground as against about 550 gainers.

The Nifty lost 566.40 points, or 5.74%, to close at 9,293.50. More importantly, the India VIX index, which was trading flat in the last few trading sessions, spiked almost 29% on Monday.

Weak global cues

“Weak global cues, poor macro data locally, the latest U.S.-China spat and poor corporate earnings led to the fall,” said Deepak Jasani, head, retail research, HDFC Securities.

Incidentally, the Nikkei manufacturing Purchasing Managers’ Index (PMI) for India declined to 27.4 in April from 51.8 in March. This was the sharpest deterioration since data analytics firm IHS Markit began recording the data 15 years ago.

Meanwhile, foreign portfolio investors continued to remain sellers of Indian shares at ₹1,374 crore on Monday. Domestic institutions also were net sellers at almost ₹1,662 crore.

Elsewhere in Asia, Hang Seng lost over 4% on Monday while Nikkei was down nearly 3%. The benchmarks of South Korea, Taiwan, Indonesia, Malaysia, Philippines and Singapore all closed in the red.