Tamil Nadu, which houses foreign manufacturers including BMW and Dell, will also close from Monday, while Delhi extended its lockdown for another week.
The news of strict lockdowns in several states may hurt sentiment ahead, Ajit Mishra, vice president for research at Religare Broking Ltd., wrote in a report.
Vaccine shortages have complicated efforts to tame the outbreak, leaving investors assessing Modi’s next moves and guessing how long states will have to remain shut.
“While India has refrained from a national lockdown thus far given its huge economic costs, the scales are tipping fast towards humanitarian benefits of curbing mass transmission, as new infections continue to rise with no peak in sight,” said Chang Wei Liang, an analyst at DBS Bank.
The lockdowns risk higher prices for everything from essential drugs to cars, due to the disruption of supply chains.
Jefferies forecasts India’s economy will grow 10.2% in the year through March 2022, down 3 percentage points from its initial outlook.
Markets will correct if the government announces a nationwide lockdown,” said Naveen Kulkarni, chief investment officer at Axis Securities Ltd.