Lockdown-like condition in Maharashrta
To contain the spread of Covid, the Uddhav Thackeray government announced the shutting of malls and multiplexes along with private offices, except those engaged in finance, insurance, banks, telecommunications, and essential services in Maharashtra for a month. A curfew will be in place during the night, and prohibitory orders issued under Section 144 will be in force during the day. From Monday, bars, and restaurants will be closed with only takeaways and parcel service to be allowed. READ IN DETAIL HERE.
Market experts blamed the strict lockdown-like conditions in the state as one of the biggest jolts to investor sentiments, leading to the market crash, as these restrictions can impact growth recovery, they say.
"The lockdown along with the severity of the lockdown is what's behind market fall today. These restrictions are a big blow to the smaller businesses at a time when they were just about recovering and getting back on track. Moreover, this could lead to the exodus of labourers from the state. If they go back now, I am not sure when they would return," said independent market expert Ambareesh Baliga.
Weak macro print
A weak PMI manufacturing print for March also elevated concerns on the growth front. Growth in manufacturing activities slowed to the lowest rate in seven months as increasing Covid cases hit demand, showed largely tracked IHS Markit purchasing managers' index (PMI). PMI fell from 57.5 in February to a seven-month low of 55.4 in March. In the PMI lexicon, a reading above 50 means growth and the one below 50 shows contraction. Employment declined in March, taking the current sequence of job shedding to a year, according to the PMI report, based on the survey of 400 manufacturers.
Spike in bond yields
A spike in US bond yields
also dented market mood on Monday. The two-year US Treasury yield rose to 0.186%, near its eight-month peak of 0.194 per cent touched in late February. Yields on longer-dated bonds also rose, with 10-year notes at 1.725 per cent in Asia on Monday, extending its rise that began on Friday after the job report, Reuters reported.
A spike in bond yields
doesn't bode well for emerging markets
like India as they lead to FII outflows.
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