sensex today: Sensex dives 871 points; Nifty ends below 14,550: Top reasons behind fall

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NEW DELHI: Equity indices plunged on Wednesday with the benchmark BSE sensex falling over 850 points dragged by banking and financial stocks amid weak global cues.
The 30-share BSE index fell 871 points or 1.74 per cent to close at 49,180; while the broader NSE Nifty plunged 265 points or 1.79 per cent to settle at 14,549.
M&M, SBI, ICICI Bank, IndusInd Bank, Axis Bank, ITC and L&T were the major losers in the sensex pack falling as much as 3.97 per cent.
While Asian Paints and PowerGrid were the only two shares which finished in green.
On the NSE platform, except Nifty Pharma, all sub-indices finished in red with Nifty PSU Bank, Metal, Bank and Financial Services falling up to 3.30 per cent.
Here are the top reasons for the fall:
* Spike in Covid cases
Covid cases in India hit a four-month high, fueling speculations of a second wave of infections in the country.
In the past 24 hours, India reported 47,262 new coronavirus cases, taking the total number of cases to 11.7 million.
The Union health ministry said that a new “double mutant variant” of SARS-CoV-2 has been detected in India in addition to the several “variants of concern” that have already been found in at least 18 states.
* Banking, financial stocks fall
Banking and financial shares witnessed heavy sell-off with Nifty bank index falling nearly 3 per cent and financials falling over 2 per cent.
“The economic activity comes down with surge in (virus) cases,” Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services told news agency Reuters.
“The global market cues are not very positive. Covid-19 cases are going up globally and that is a major concern. Until you see some cool off sustainably in commodity prices and bond yields, equity markets are unlikely to go up in a hurry,” he added.
* Global sell-off
Global stocks also tumbled after Wall Street declined and European governments extended anti-coronavirus lockdowns, clouding the outlook for economic recovery.
Overnight, Wall Street gave up most of the previous day’s gains as technology, industrial and bank stocks fell.
Investor confidence was shaken after Germany, Europe’s biggest economy, and the Netherlands extended lockdowns and imposed new travel and business curbs in response to spikes in infection.
* Concerns over global recovery
Investors are wavering between optimism about coronavirus vaccines that might allow business and travel to return to normal and concern about the pace of recovery.
Traders also are watching the potential for inflation pressures to pick up after struggling economies were flooded with credit and government spending.
This depressed US bond prices, prompting some to shift money out of stocks.
The yield of the 10-year Treasury note fell to 1.62 per cent, down from last week’s level above 1.70 per cent. This weighed on banks and other financial companies which look to yields as a benchmark for the interest rates they charge on mortgages and other loans.
(With inputs from agencies)

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