India Stocks Rebound After Biggest Drop in More Than a Month

(Bloomberg) -- Indian stocks dropped in volatile trading on Tuesday on concern that the extended nationwide lockdown to contain coronavirus infections may threaten the nation's already fragile economy.

The S&P BSE Sensex Index fell 0.8% to 31,453.51 at the close in Mumbai after earlier rising as much as 1.7%. The NSE Nifty 50 Index declined by the same magnitude. Both gauges extended declines on Tuesday after losing more than 5% Monday, bucking the optimism in global stocks as a number of economies move toward easing lockdowns.

India's Prime Minister Narendra Modi on Saturday extended stay-at-home orders for two weeks from May 4, while easing some restrictions and mulling ways to restart activity in Asia's third-largest economy. The South Asian nation has reported 46,437 Covid-19 infections and 1,566 deaths, according to data compiled by Johns Hopkins University.

“Stocks will remain volatile as infections are rising, lockdown has been extended and there is no fresh stimulus announced by the government,” said Sameer Kalra, an investment strategist at Mumbai-based Target Investing. “The revenue for government as well as the companies is trending lower.”

The India VIX Index, a measure of volatility expectations, jumped 28% on Monday, the most since March 12. It slipped 0.9% on Tuesday.

“Volatility will not go away anytime soon, so trading will keep getting influenced by day-to-day developments on the virus,” said Deven Choksey, a Mumbai-based strategist at KRChoksey Investment Managers Pvt.

The yield on the 10-year bond fell by 1 basis point while the rupee was little changed against the U.S. dollar.

The Numbers

Fifteen of 19 sub-indexes compiled by BSE Ltd. dropped, led by gauges of real estate and financial stocks.
State Bank of India Ltd. and Bajaj Finance Ltd. were among the top losers on the benchmark index.