India Stocks Give Up Gains as Investors Mull Risk of Second Wave

(Bloomberg) -- India equities closed lower as investors weighed the risk of seeing the coronavirus spreading faster with the country easing its lockdown. Stocks had rallied earlier in the day on expectations of a bigger fiscal stimulus following an increase in the government’s borrowing target.

The S&P BSE Sensex was down 0.3% to 31,561.2 at the 3:30 p.m. close in Mumbai, while the NSE Nifty 50 Index slipped 0.1%.

India’s revised borrowing program signals greater fiscal expenditure to support Asia’s third-largest economy through the pandemic. That may also help boost appetite for equities after concerns about a lack of stimulus sent stocks to their worst week in five last Friday.

“Equity investors will be encouraged by the government’s substantially higher borrowing plan, which is indicative of more fiscal stimulus on the way,” said Anita Gandhi, an investment adviser at Mumbai-based Arihant Capital Markets Ltd.

Investors remain cautious however, after countries such as China and South Korea reported fresh cases of coronavrius after a gap, highlighting the risk of a second wave of infections as India moves to loosen its nationwide lockdown.

“The bigger worry is how some countries have eased lockdowns and seen a relapse in cases when their economies have started moving again,” said Umesh Mehta, head of research at Samco Securities Ltd. in Mumbai, “That is why the market is in a state of flux. It is not in any hurry to rise rapidly or collapse either.”

Reliance Industries Ltd. rose 1%, sealing a fifth straight day of advances, as investors anticipate it could see more investments from foreign backers. The company has already completed a slew of deals starting with Facebook Inc. and including the likes of Silver Lake Partners LP.

The Numbers

  • Fourteen sector sub-indexes compiled by BSE Ltd. rose, led by a gauge of automakers
  • Sixteen Sensex shares rose while 14 fell
  • Reliance Industries Ltd. contributed most to the index advance, gaining 1%, Hero Motocorp Ltd. had the biggest boost, jumping 6.3%; ICICI Bank Ltd. contributed most to the index decline and was the biggest loser with a 5.2% fall

Related Stories

©2020 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.