Indian stocks drop as investors question rally amid coronavirus surge

The S&P BSE Sensex dropped 0.5% to 37,934.73 at the close in Mumbai to mark its second consecutive day of declines.

Indian stocks declined as the still-rising coronavirus caseload made some investors question the sharp rebound from this year’s low.

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. (REUTERS)

The S&P BSE Sensex dropped 0.5% to 37,934.73 at the close in Mumbai to mark its second consecutive day of declines. The gauge is up more than 45% from its March low even as the South Asian nation has become the third most-infected country in the world. Some of the technical indicators are signaling the bounce may have been overdone. The NSE Nifty 50 Index slid 0.6%.

“The risk-reward is not great,” Surendra Goyal, an analyst at Citigroup Inc., wrote in a note, maintaining his March 2021 target for the Nifty at 10,500. The forecast level implies a drop of more than 6% from current levels. “It is difficult to make a fundamental argument around the flows/liquidity.”

The number of confirmed coronavirus cases in the world’s second-most populous nation stands at 1.39 million, according to data collected by Johns Hopkins University and Bloomberg News. A total of 32,063 people have died while 885,577 have recovered.

Ten of 17 Nifty 50 companies that have reported results so far have either beaten or met analyst estimates for profits while two results were not comparable, according to data compiled by Bloomberg.

The rupee was little changed against the U.S. dollar, while the yield on the 10-year benchmark government bond rose 3 basis points to 5.85%.