NEW DELHI: Selling in financials and private banks weighed on benchmark indices that slid lower on Monday as restrictions in Europe and likely fallout in Brexit negotiations dampened the morale on Dalal Street.
Volatility indicator has also surged significantly, highlighting the nervousness among traders.
A new and faster-transmitting strain of the virus in the UK is an area of concern. This has led to further restrictions on travel and economic activity. Acceleration in the number of
cases in the US and poor economic data are other dampeners. However, the US Congress agreement on $900 billion of fiscal stimulus is likely to support markets. High valuation continues to be a concern in India. But the power of FII-driven liquidity is overwhelming all negative news.
Factors driving markets:
Virus mutates: Health officials in the UK detected a new strain of virus that is likely to transmit with greater speed, spooking markets across the world. Following the discovery, India along with many other countries, temporarily banned air travel from London.
More limitations: Covid-19 infections continued to affect globally as South Korea and London reported record new coronavirus cases on Sunday, with Britain's health minister suggesting tighter curbs could stay for some time.
How are bluechips going
After opening in the red, benchmark indices dipped lower and went deep in the red during afternoon. BSE flagship Sensex closed 1,406 points, or 3 per cent, lower at 45,554. NSE benchmark Nifty followed and declined 432 points or 3.14 per cent to 13,328.
The Nifty is keeping above the crucial 13,700 level. If we can continue doing that, the markets should be headed to 14,000. A strong support lies at the 13,500-13,600 levels and as long as that holds, the trend of the index remains bullish and traders can utilise any dip to accumulate long positions,” said Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments.
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