Markets fall after flat opening; Sensex down over 200 points

Domestic markets descended into negative territory after opening flat on Wednesday, tracking volatile global cues. The markets were also dragged lower by a fall in oil stocks in the wake of increased taxes on petrol and diesel.

At 9:30 am, BSE Sensex was down 228.11 points or 0.73 per cent at 31,225.40, while NSE Nifty was down over 50 points, barely above 9,100.

The key factor that dented sentiments on D-Street on Wednesday was the Centre’s decision to hike fuel taxes, which will provide additional monetary support to the government, but will increase OMCs’ cash outflow.

Shares of OMCs such as HPCL, BPCL and IOC fell sharply on the stock market in early trade. Shares of ITC were also down almost 6 per cent. All Nifty sectoral indexes apart from Nifty Metal and Nifty Realty were in red, with Nifty FMCG leading the fizzle.

There are several other factors that have dented market sentiments since yesterday.

Renewed global tensions between US and China are back in focus and has worried Asian investors, who are already coping with increased market volatility in the wake of Covid-19 pandemic.

Analysts expect market volatility to continue as company results have also been weak. Yes Bank and six other companies are expected to declare their quarterly numbers today.

However, the biggest worry for investors is the uncertainty arising from a fresh spike in Covid-19 cases in India. The country is just short of 50,000 positive cases and 1,700 deaths.

Many states who had relaxed some lockdown rules have again reinforced them to avoid any further rise in cases. Analysts remain worried as the fresh spike in cases could result in the shutdown of key economic activities that started yesterday.

Investors, meanwhile, are also awaiting a relief package that the government was expected to announce. Many industry bodies have said that a common relief package is necessary for all affected sectors immediately or it could lead to permanent damage.

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