Nifty, Sensex fall nearly 2% as virus cases surge, overtaking the UK

A man reacts as he looks at a screen displaying the Sensex results on the facade of the Bombay Stock Exchange (BSE) building in Mumbai, India,

Indian shares fell nearly 2% on Friday as coronavirus cases in the country surpassed the UK, adding fuel to a global sell-off in riskier assets over fears that a resurgence of infections could impact economic recovery.

While India has followed moves in many economies to ease its previously stringent lockdowns, the number of daily cases has neared 10,000 this week, driving the total number to 297,535 on Friday. It is now the fourth worst affected country in the world.

The three major U.S. stock indexes fell more than 5%, posting their worst day since mid-March, when markets were sent into freefall by the abrupt economic lockdowns put in place to contain the pandemic.

Other Asian peers too dropped, tracking Wall Street’s decline.

In Mumbai, NSE Nifty 50 index fell 1.7% to 9,733.60 by 0522 GMT, while the benchmark S&P BSE Sensex was down 1.8% at 32,952.99.

“Global scenario is overall weak … The second wave of the infection is hitting the market sentiments and economies as well,” said Rahul Sharma, head of research, Equity99 Advisors in Mumbai.

“Markets are being driven by the sentiments and current space is so volatile that many investors are getting trapped, we are advising traders to remain cautious.”

The U.S. Federal Reserve this week predicted the U.S. economy would shrink 6.5% in 2020 and unemployment would still be at 9.3% at year’s end.

Standard and Poor’s on Friday revised India’s real GDP growth forecast for fiscal 2021 to negative 5% and said it sees risk of serious local epidemic, enduring financial and corporate distress in the country.

HDFC Bank and Infosys Ltd were top drags in the Nifty 50 index, falling 2.2% and 3.1%, respectively.

IndusInd Bank Ltd was the top loser in Nifty 50 index, falling 5.81%.

Indian investors now await retail inflation data for May due later in the day.

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