Indian shares slide amid rise in coronavirus cases, poor earnings
Indian stocks slid on Tuesday as coronavirus cases rose steadily at home and elsewhere, while a clutch of poor corporate earnings reports and the lack of an economic stimulus to aid small businesses further weighed on sentiment.
A broker reacts while trading at his computer terminal at a stock brokerage firm in Mumbai, India, June 29, 2015. REUTERS/Danish Siddiqui/Files
India has been reporting roughly 2,000 new coronavirus cases daily in recent days, but is expected to further ease a weeks-long lockdown soon as millions of workers face losses in incomes. On Tuesday, India’s tally of infections had crossed 70,000 and deaths neared 2,300.
The central Chinese city of Wuhan, where the pandemic originated, reported five new cases on Monday, casting doubts over efforts to lower coronavirus-related curbs as businesses restart and individuals went back to work.
Fears of a second wave of infections also drove Asian shares lower on Tuesday.
The NSE Nifty 50 index .NSEI was down 1.60% at 9,090.95 by 0510 GMT, while the S&P BSE Sensex .BSESN dropped 1.67% to 31,036.79. The Nifty 50 was on track to fall for a second consecutive day.
India is expected to unveil a second stimulus package soon, aimed at medium- and small-sized companies battered by the coronavirus, but its timing remains unclear and the government is yet to make any announcement.
Most small-scale businesses may perish without timely government support, a CARE Ratings study said on Monday, adding that the employment of up to 30 million manufacturing workers was under stress.
“In case the stimulus is not up to the market’s expectation, we could see some more correction,” said Rusmik Oza, head of fundamental research at Kotak Securities in Mumbai.
“It’s a sell-on-rise market right now and it is not going to sustain at higher levels,” Oza said, adding that investors were looking to conserve cash and stick to defensive stocks.
Meanwhile, poor earnings reports have bogged down lenders, which have been making huge provisions to account for credit losses in the wake of the COVID-19 crisis.
Shares in financial services and drug conglomerate Piramal Enterprises (PIRA.NS) sank 10% after it reported a March-quarter loss of more than $ 200 million due to coronavirus-led provisions.
The Nifty banking index fell the most among the 12 sectoral indexes, with a 2.81% drop. HDFC Bank Ltd (HDBK.NS), India’s top private-sector lender, was the biggest drag on the Nifty 50, falling 3.9%.