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Mumbai: Indian equity markets on Tuesday erased all gains made earlier in the day on concerns over rising covid-19 cases.

After rising nearly 1% in early trade, benchmark equity indices Sensex and Nifty were flat around noon at 47,940 points and 14,316, respectively.

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"Market is expected to remain volatile in the near term due to sharp increase in COVID-19 daily cases in the country and possibility of large economic restrictions. Further, possibility of lockdown in large states like Maharashtra will weigh on investors’ sentiments," said Binod Modi, head strategy at Reliance Securities.

India recorded 1,61,736 fresh cases on Monday. The total tally of covid-19 cases in the country stood at 1,36,89,453. Registering a steady increase for the 34th day in a row, the number of active cases rose to 12,64,698, or 9.24% of the total infections.

"We continue to believe that given experience in 2020 and possibility of further ramp-up in vaccination rollout process, spread of virus can be controlled without a large-scale of economic damage. Therefore, any near-term correction in the market should be treated as opportunity of bargain trading," Modi added.

On Monday, markets had slumped nearly 3% amid a fear of complete lockdown in Maharashtra and localised lockdown in many states on continued rise in covid infections.

IT stocks fell on Tuesday due to profit booking. Tata Consultancy Services dropped 4%, Infosys, and ech Mahindra, HCL Tech, and Wipro declined nearly 2-3%.

Though Indian markets are likely to be highly volatile given the surge in covid cases in India, there could be some positive impact from the earnings season which started this week, said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial.

"We expect Q4 to be another strong quarter and investors would watch out for management commentary given the resurgence of Covid fear which may pose a risk to the growth estimates. Hence the pace of vaccination will assume crucial importance," Motilal Oswal report added.

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