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Nifty, Sensex stumble after five-day rally as virus fears take hold
Photo Credit: Reuters

Indian shares stumbled on Wednesday after a five-day rally, as surging coronavirus infections weakened hopes of a swift economic recovery from the pandemic.

India, the third most affected country by the virus, reported 22,752 new cases as of Wednesday morning, taking the total to 742,417, and death toll to 20,642, health ministry data showed.

After trading in a narrow range for most of the day, the NSE Nifty 50 index closed down 0.87% at 10,705.75, while the benchmark S&P BSE Sensex slipped 0.94% to 36,329.01. The indexes had risen around 5% over the last five sessions to four-month highs.

Global stocks too lost momentum as investors stayed away from risky bets on worries over the impact of increasing case numbers on a stock market recovery, triggered by massive liquidity and hopes for a vaccine.

India's Nifty 50 has recovered about 42% since the crash in March, even as government stimulus underwhelmed and cases rose.

Foreign investors turned net buyers of Asian shares in June for the first time in five months, with Indian equities leading the region with inflows of $2.89 billion.

"There is a tug between worries over the virus and its impact on the economy, and the liquidity push that is creating a support in the market," said Mayuresh Joshi, head of equity research at William O'Neil & Co in India.

On Wednesday, heavyweight conglomerate Reliance Industries Ltd stepped back from recent record highs, settling 1.4% lower, while shadow lender Bajaj Finance Ltd dropped 4.3% after sharp gains in the previous session.

Automakers Maruti Suzuki India Ltd and Tata Motors Ltd slid 2.9% and 3.4%, respectively, dragging the Nifty Auto Index 2% lower.

The Nifty PSU Bank Index, which tracks state-run lenders, pared some gains, but still ended the day up 2.3%.

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