Indian Stocks Swing in Volatile Trade as Investors Assess Risks
The benchmark S&P BSE Sensex rose 0.2% to 38,508 as of 10:08 a.m. in Mumbai.
(Bloomberg) -- Indian equities closed lower in volatile trading on Tuesday on concerns from economy to coronavirus infections to a border clash with China.
The benchmark S&P BSE Sensex dropped 0.1% after earlier rising as much as 0.9%. The index has risen more than 45% from a low in March, outperforming the MSCI Asia Pacific Index during this period. The NSE Nifty 50 index fell 0.3%
While Asia’s third-largest economy has eased some of the virus-induced restrictions, its outlook is yet to improve after having posted its worst contraction on record in the June quarter. India has now overtaken Brazil as the country with the second-highest number of infections and it seems inevitable that the nation will at some point overtake the U.S. as well.
“Indian equity markets seem to be reflecting undue confidence about the future path of recovery,” Kaushik Das, an economist at Deutsche Bank AG wrote in a note. Stocks are not reflecting the real economy’s condition, and “the divergence is getting more stark with each passing day,” he wrote.
A gauge of bank stocks dropped 0.9% after the central bank announced rules to restructure loan accounts that have turned bad due to the pandemic.
The rules will provide relief to banks for the short term, but “this would only postpone the stress,” Yuvraj Choudhary and Mohit Mangal, analysts at Anand Rathi Financial Services, wrote in a note.
Yield on India’s benchmark 10-year government bonds rose 2 basis points to 6.05%, while the rupee weakened 0.4% to 73.60 per dollar.
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