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Benchmark indexes slumped by 3%, led by financial stocks.
Benchmark indexes slumped by 3%, led by financial stocks.

Markets likely to be muted; bank stocks in focus post Lakshmi Vilas Bank issue

  • Asian equities were sluggish on Wednesday, tracking a lower Wall Street session as concerns over rising coronavirus cases and fresh lockdowns dampened the euphoria from vaccine trial breakthroughs

MUMBAI: After touching new highs, Indian equity markets are likely to be muted on Wednesday while trends in SGX Nifty suggest a flat opening for benchmark indices. On Tuesday, the Sensex closed at 43,952.71, up 314.73 points or 0.72%. The Nifty closed at 12,874.20, up 93.95 points or 0.74%.

Asian equities were sluggish on Wednesday, tracking a lower Wall Street session as concerns over rising coronavirus cases and fresh lockdowns dampened the euphoria from vaccine trial breakthroughs.

A skittish mood swept investors as several US states began restricting gatherings and mandated face-coverings after more than 70,000 Americans were hospitalized for treatment of covid-19 as of Monday, according to a Reuters tally of public health figures.

The surge in new coronavirus cases comes even as vaccine trial results from Moderna on Monday showed that its covid-19 vaccine candidate appears to be 94.5% effective in preventing infection. That announcement had caused markets to rally, with the Dow Jones and S&P 500 indexes reaching record highs.

Also weighing on sentiment was US data on Tuesday that showed retail sales increased less than forecast in October, with the potential for even further slowing.

US Federal Reserve Chairman Jerome Powell said on Tuesday the current surge in coronavirus cases is a big concern, and the economy will continue to need both fiscal and monetary policy support.

Powell added that the Fed is committed to "using all of our tools to support the recovery for as long as it takes until the job is well and truly done."

Back home, the Reserve Bank of India on Tuesday announced the merger of Lakshmi Vilas Bank (LVB) with the wholly-owned subsidiary of DBS Bank in India soon after it imposed a one-month moratorium on the private lender and capped deposit withdrawals at 25,000.

Lenders to troubled Dewan Housing Finance Ltd (DHFL) are looking at a repayment strategy for 55,000 fixed deposit holders as part of a resolution plan.

The government on Tuesday sought more time from the Delhi high court to decide whether it will challenge the international arbitration court’s ruling in favour of Vodafone Plc in the retrospective tax case. The matter has been adjourned to 8 December.

Meanwhile, US Treasury yields fell in the wake of the retail sales report as it underscored the possibility of a slowdown in the fourth quarter.

Benchmark 10-year notes last rose 11/32 in price to yield 0.8701%, from 0.906% late on Monday.

The US dollar hit its lowest level in a week, with expectations for continued weakness on expectations for more fiscal and monetary stimulus as well as optimism over a potential vaccine.

The dollar index fell 0.082%, with the euro up 0.08% to $1.1862.

The offshore Chinese yuan rose to its highest since June 2018 against the dollar, as positive economic data in the world's second-largest economy buoys the currency.

(Reuters contributed to the story)

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