Indices reverse gains; financials topple on COVID provisioning concerns

Benchmarks Sensex and Nifty erased early gains to settle in the red on Monday, dragged by an intense selloff in financial counters amid concerns that lenders beefing up provisioning against COVID-19 may escalate slippages.

The BSE gauge Sensex tumbled over 800 points from the day's high to end at 31,561.22, down 81.48 points or 0.26 per cent.

Likewise, the NSE barometer Nifty fell over 220 points from its day’s peak to close at 9,239.20, dropping 12.30 points or 0.13 per cent.

Analysts said that overall domestic market sentiment also remained subdued due to spiking coronavirus cases in the country and tepid cues from global markets.

On the Sensex chart, ICICI Bank was the top laggard, cracking over 5 per cent, followed by Kotak Bank, HUL, HDFC, IndusInd Bank, HDFC Bank and Nestle India.

On the other hand, Hero MotoCorp, Bajaj Auto, Maruti, TCS and HCL Tech were among the gainers.

Sectorally, BSE bankex, finance, power, FMCG and healthcare indices ended up to 2.31 per cent lower.

While auto index rallied 4.23 per cent. Telecom, teck, metal and IT indices too ended with gains.

In the broader market, BSE midcap jumped 0.65 per cent, while smallcap index closed in the red.

Joining peers, ICICI Bank made COVID-19 related provisions of Rs 2,725 crore to further strengthen the balance sheet - a concern on fiscal slippage front.

The private sector lender reported a 6.91 per cent growth in March quarter net profit at Rs 1,251 crore on a consolidated basis, after setting aside provisions for potential impact of the COVID-19 pandemic over and above RBI's requirements.

Almost all the private sector lenders who have reported their earnings for the March quarter have set aside additional money as provisions, including HDFC Bank, Axis Bank, Indusind Bank and also RBL Bank, reflecting the impact of the crisis that the banking system is bracing for.

“Indian markets opened on a positive note following global cues as trade-war fears receded and more countries announced plans to ease their lockdown restrictions amid hopes of global economies reopening as social distancing measures are eased,” Narendra Solanki, Head- Equity Research (Fundamental), Anand Rathi, said.

However, the market couldn't hold the strength during the day as selling pressure was witnessed in heavy index, erasing majority of gains in afternoon session as COVID-19 related one-time provisioning was seen undercutting the earnings on the financial companies, he added.

The traders also took note of Prime Minister Narendra Modi’s meeting with chief ministers of all states today which is expected to discuss the plan for exit from the ongoing nationwide lockdown to prevent the spread of coronavirus.

Globally, bourses in Hong Kong and Tokyo ended on a positive note, while this in Shanghai and Seoul closed with losses.

Stock exchanges in Europe were trading significantly lower in early deals.

International oil benchmark Brent crude futures were trading 2.39 per cent lower at USD 30.23 per barrel.

On the currency front, the rupee slipped 19 paise to close at 75.73 against the US dollar.

In India, the death toll due to COVID-19 rose to 2,206 and the number of cases climbed to 67,152, according to the health ministry.

Globally, the number of cases linked to the disease has crossed 41 lakh and the death toll has topped 2.82 lakh.