On the first day of the week, there has been a huge decline in the domestic stock market. During this, the Sensex and Nifty broke 1400 points and the Nifty 400 points. 4 lakh crore rupees of investors were drowned in this decline.
Deepening concerns about the corona infection have increased the tension of investors once again. After exactly 13 months, the Sensex and the Nifty have again witnessed a sharp sell-off. Experts say that the second wave of coronavirus infection is now frightening again. Its effect is also visible on economic activities. The effect of lockdown in different parts of the country is clearly visible in the factory output. The PMI (Purchase Manager Index) declined to 55.4 in March from 57.5 in February. Statistics have shown that the production in factories in March has come down to the lowest level in 7 months. In such a situation, investors need not panic. Rather, good stocks should be bought on this decline.
Heavy fall in stock market
This is the second biggest decline in the domestic stock market this year. Asif Iqbal, Head of Research, Escorts Security told TV9 Hindi that the Nifty has recorded the second decline of this year and the biggest decline in FY 2021-22.
Earlier, on 26 February 2021, the Nifty closed at 568 points in intra-day (trading day) and 452 points on closing (on closing). Today, 4 lakh crores of investors have drowned in this fall.
Why the stock market fell
(1) Asif Iqbal says that there has been a sharp increase in cases of corona infection in many states of the country. Due to which there has been a big impact on economic activities. That is why there is a sharp decline in the stock market.
(2) Increased bond yield in the US has also increased investor concerns. Actually the bond yield in India has increased. There is a danger of rising interest rates due to increase in bond yield.
The cost of doing business will increase if interest rates rise. Especially its effect is seen on banking shares.
This is because banks invest the most in government benchmark bonds. Banks lose from their bond portfolios due to the sell-off in bonds.
(3) Lone Moratorium
Banking stocks have declined due to the news regarding loan moratorium. Asif says that the Supreme Court has recently given an important decision on the interest being charged on the loan moratorium.
The Supreme Court has said that interest cannot be recovered on interest on any loan availing moratorium facility. This decision of the Supreme Court will cost 1800 to 2000 crores rupees on public sector banks (PSBs).
Asif explains that this may increase the pressure on banks in the coming days. In such a situation, banks will have to increase provisioning. So their profits will come in the coming quarter.
What should investors do now?
Asif said that due to Corona, there is an atmosphere of little fear at this time. He further said that from next week, the increasing cases of Corona will be seen to decrease.
After which the market will gain momentum. Then investors will miss the benefit of this decline. He said that due to Corona, the market would not react for more than two days. That is why shopping advice is on the decline.
The world’s largest brokerage house CLSA has told in its report that at the current level, investment can be made in Sun Pharma. The target of the stock has been fixed at Rs 760.
JPMorgan recommends buying at SAIL. The target of the stock has been fixed at Rs 105. It has been said in the report that the company has reduced the debt. Further reduction in debt is expected.
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