Stock markets plunge by over 3.5% wiping off over ₹8 lakh crore of investor wealth – but may recover soon as per analysts

• Indian share markets bore the brunt of panic selling, with the benchmark Sensex and Nifty falling by over 3.5% during the day’s trading.
  
• The panic selling wiped off over ₹8 lakh crore of investor wealth, but the worst might be over for now.
  
• Market analyst Arun Kejriwal suggested that the recovery could happen as soon as this week itself.
  

Rising COVID-19 cases and lockdown paranoia sent the share markets reeling under panic, wiping off over ₹8 lakh crore of investor wealth. Both Sensex and Nifty slumped by over 3.5% as the markets feared the second wave of COVID-19 leading to lockdowns.

However, investors who are feeling the heat today might find solace that analysts expect that the worst might be over for now.

“Fears of an impending lockdown amid rising COVID-19 cases led to panic selling today. The markets have accounted for the expected lockdown in Maharashtra, and may stage a recovery as soon as this week,” market analyst Arun Kejriwal told Business Insider India.

Small and mid-cap investors singed under the sell-off while small and mid-cap indices fell by 4.5-5%, Sensex declined by a relatively lower 3.5%.

Nifty was hovering around the 14,300 mark at 2 pm on April 12, down by over 500 points from its previous close on April 9, the previous working day.

The worst losers were spread across banking, automobile and infrastructure sectors.


Source: NSE, as of 2:30 pm, April 12, 2021.

However, Binod Modi of Reliance Securities struck a concerned note. “Domestic equities do not look to be inspiring at the moment. A sharp increase in Covid-19 daily cases in the country, and possibility of large economic restrictions are expected to keep investors nervous in the near term,” he was quoted by PTI.

The focus is on the impending lockdown in Maharashtra, which is the worst affected state in terms of rising COVID-19 cases across the country. This, Modi said, is also weighing in on investor sentiments.

According to Kejriwal, the next support level for Nifty is 14,200. Based on the existing number, investors still have a cushion of around 100 points. Kejriwal explained that the markets could stay above this level for this week.

Much depends on the earnings of the leading three information technology (IT) services companies – TCS, Infosys and Wipro – all of whom are scheduled to announce their March 2021 quarter results this week, starting with TCS today (April 12).

The results of these companies will decide which way the IT sector goes after today’s panic sell-off. This will also have an impact on the overall markets, according to Kejriwal.

If you were holding off on buying stocks, now could be a good time. After all, corrections and sell-offs present an opportunity. American investor Warren Buffet had once said, “be fearful when others are greedy, and greedy when others are fearful.”

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