Indian shares drop as investors take profits, virus worries weigh

BENGALURU: Broad-based losses pulled Indian shares lower on Monday as investors locked in profits in high-flying stocks, while news of fresh COVID-19 restrictions in parts of the country also weighed on sentiment.

Domestic equities rose sharply in the first two weeks of February thanks to solid corporate earnings and a well-received federal budget, but markets have pared some of those gains in recent sessions due to profit-taking.

The NSE Nifty 50 index ended 2.04% lower at 14,675.70, clocking its biggest one-day drop since Dec. 21. The S&P BSE Sensex closed down 2.25% at 49,744.32.

Both the indexes finished lower for a fifth straight session.

India's COVID-19 outbreak has slowed sharply since daily cases hit a peak in September, but a resurgence in infections in the western state of Maharashtra has forced fresh restrictions and spurred fears of a second wave of the disease.

"There is a round of profit-booking that is still happening ... valuations remain high and we are seeing a consolidation," said Siddhartha Khemka, head of retail research at Motilal Oswal Securities in Mumbai.

"The rise in bond yields and news of fresh COVID-19 restrictions are factors that are adding to investor worries ... Until there is more clarity on how the situation evolves, people are booking some gains."

MSCI's All Country World Index was down 0.4% on Monday as expectations for faster economic growth and inflation globally battered bonds and boosted commodities.

In domestic trading, Reliance Industries closed down 3.5% and was the biggest drag on the indexes after India's top court barred a final ruling by a tribunal reviewing the conglomerate's deal to buy Future Group's retail assets.

The Nifty metal index was the only sub-index in positive territory, adding as much as 3.2% as copper prices rose on hopes of a pick-up in demand.

Investors also await the minutes of the February monetary policy meeting due later in the day.