Markets crash as stimulus fails to boost sentiment

Mumbai: Equity benchmark Sensex crashed 1,069 points to close at its lowest level in nearly six weeks on Monday, dragged mainly by heavy selling in financial and auto counters as the government's stimulus package failed to live up to market expectations.

Contrary to an overall positive trend in world markets, domestic bourses ended sharply lower as the Rs 20 lakh crore economic package, announced in five tranches spread over as many days, left investors disappointed, besides worries grew over the biggest ever single-day spike in the number of Covid-19 cases in the country.

The BSE gauge Sensex closed 1,068.75 points or 3.44 per cent lower at 30,028.98, while the broader NSE Nifty plunged 313.60 points or 3.43 per cent to 8,823.25.

IndusInd Bank was the top laggard in the Sensex pack, cracking around 10 per cent, followed by HDFC, Maruti Suzuki, Axis Bank and UltraTech Cement.

On the other hand, TCS, Infosys, ITC and HCL Tech closed with gains. Sectorally, BSE bankex, finance, auto, realty, capital goods, oil and gas, metal and consumer durables indices sank up to 6.69 per cent, while IT and teck indices ended with gains.

In the broader market, midcap and smallcap indices plunged up to 3.87 per cent. With the nationwide lockdown to curb the spread of coronavirus being enforced for the fourth time, investors remained cautious in terms of playing their bets.

The government has extended the lockdown for another two weeks till May 31.

"Domestic markets opened lower despite positive global cues and dragged by muted domestic sentiments as Rs 20 lakh crore stimulus package came far lower than what markets were expecting" Paras Bothra, President of Equity Research, Ashika Stock Broking, said.

There will be sharp disconnect between the global markets and domestic bourses as the rally on world bourses will majorly be backed by fiscal measures, he added.

The government, in its first four tranches of the stimulus package, focussed on credit line to small businesses and new fund creations to be shouldered by banks and financial institutions with very little extra budget spending.

In the last set of measures, the centre on Sunday announced plans to privatise PSUs in non-strategic sectors and suspend loan default-triggered bankruptcy filings for one year, and also gave a Rs 40,000-crore hike in allocation for the rural employment guarantee scheme to provide jobs to migrant workers.