Manic Monday! Major factors for the stock market crash today
Published On: Monday, April 19, 2021 | By: Team KnowMyStock
The Indian benchmark indices nosedived in today's(19th April 2021) session mainly due to a strong second wave of Covid-19 in the country, leaving the market bulls battered. An across-the-board selling resulted in a 1,469-point crash on the BSE barometer Sensex in intra-day trade. The index, however, recouped some losses and ended 883 points lower at 47,949 with HDFC twins, Reliance Industries, and select banking counters among the worst drags. Barring shares of Dr. Reddy's Labs and Infosys, all constituents of the 30-pack index traded in the red. Meanwhile, its NSE counterpart Nifty after shedding as much as 425 points ended with a 258-point cut at 14,359. High volatility marked today's session with India VIX settling 10.20 percent higher at 22.48. The sell-off was equally bad in the broader markets as mid-cap and small-cap indices lost 2.1 - 2.4 percent lower. Except for Nifty pharma, all indices on NSE traded in the red.
1. The biggest single-day spike in Covid-19 infections in India once again spooked investors on Dalal Street, as they feared the impact of the same on economic and earnings growth following lockdown-like restrictions by most states to curb the spread of virus.
2. The second wave of Covid-19 in India has cast a cloud over economic growth and earnings outlook going ahead, worrying investors.
The domestic markets have moved in a linear manner over the past one year amid expectations of strong earnings growth in FY21 and FY22. Analysts believe any negative surprises on the earnings front can again derail the recovery.
3. As a resurgence in Covid cases poses risks to India's fragile economic recovery, it has forced leading brokerages to downgrade India's GDP growth projections for the current fiscal year to as low as 10 per cent, dampening market sentiment.
4. The above mentioned concerns were also visible among foreign portfolio investors (FPIs) who have pulled out a net Rs 4,615 crore from Indian markets in April so far. According to the depositories data, overseas investors pulled out Rs 4,643 crore from equities but invested Rs 28 crore in the debt segment. If they turn net sellers in April, that would be the first monthly selling since September 2020. Sell-off by FPIs often leads to sharp market correction.
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