Even as the US stock indices S&P and Nasdaq hit record high in overnight trade, there was seen weakness in the Indian markets in line with Asian peers, which were seen snapping 4-straight days of gains. At the time of writing this report, Japan's Nikkei traded weak by over 0.8%.
Domestic equities do not look to be encouraging at the moment. Benchmark indices have clearly defied ongoing concerns of rapid rise in COVID-19 cases and threat to earnings recovery. We note that absence of nationwide lockdown and high chances of reversal in cases by the end of May or mid of June'21 offered comfort", said Binod Modi, Head Strategy at Reliance Securities.
Bank and financials weigh
HDFC twins namely HDFC Bank and HDFC together with ICICI Bank weigh on the markets. There was a drag of over 2 percent on the Bank Nifty. Nifty PSU Bank though trade higher.
RIL is another heavyweight pulling the indices down
After four straight days of gains, ahead of its Q4FY21 results that are to be announced today traded almost steady today. On a sequential basis, the oil to telecom conglomerate is expected to announce double digital growth in consolidated revenue, nonetheless the profitability may be hit because of sharp increase in tax expenses.
Rising Covid 19 situation continues to weigh:
New Covid cases of 3.79 lakhs and deaths numbering 3645 during the last 24 hrs tell us that the light at the end of the tunnel, which the market is focussed on, is a long way away. But the market is taking cues from the second wave experience of other countries where the Covid second wave curve flattened & fell in around two months. This explains the resilience of the market in the midst of very negative Covid-related news, said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services:
US markets amid strong economic data in overnight traded clocked record highs. Nonetheless sentiment in the Asian markets dampened as China's crackdown on technology firms dented sentiment. An important point to be understood is that global markets are highly correlated, and therefore, a major correction, when it happens, is likely to be global.