"Since the second wave of the pandemic is turning out worse than expected, there is profound uncertainty about its impact on the economy and markets. Since the situation is the worst in economically significant Maharashtra, this can impact the market's assumption of around 11% GDP growth & above 30% earnings growth", said V K Vijayakumar, chief investment strategist at Geojit Financial Services.
"The situation may improve if cases peak soon and start coming down. But presently, this is a negative. The bad health situation and INR depreciation have improved prospects for the pharma & IT sectors, which are likely to remain resilient even during a market downturn. Economy-facing stocks are likely to be under pressure," Vijaykumar added.
Banking stocks fell the most on Monday. RBL Bank slumped 8%, Indusind Bank dropped 7.7%, Federal Bank by 6%, State Bank of India by 5%, Bandhan Bank was down 4.8%, Kotak Mahindra Bank by 3.7%, ICICI Bank by 3.5%, and Axis Bank slumped 3.2%.
"The continued weakness in banking stocks, due to increased fear of a spike in NPAs, is limiting upside despite the strong performance from the other sectoral pack so the alignment between the benchmark and banking index is critical else the consolidation will continue. Amid all, we reiterate our cautious view and suggest traders preferring hedged bets," said Ajit Mishra, VP Research, Religare Broking.
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