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Indian equities slid by more than a per cent to one-month lows on Tuesday, erasing gains made in early trade, amid selling in financial and public sector names, in what is a truncated trading week with just three trading days.
The Sensex climbed over 500 points after a gap-up opening, before falling 1,053 points, or 1.47 per cent, to end at 70,371. The Nifty settled at 21,239, down 333 points or 1.5 per cent. The sell-off was deeper in the broader markets, with Nifty Midcap 100 and Nifty Smallcap 100 down 3.1 per cent and 2.8 per cent, respectively.
Foreign portfolio investors sold shares worth ₹3,115 crore, taking their month to date selloff to over $2 billion.
“FPI selling given high valuations, mixed results for the earnings season and recent escalations in tensions in the Middle East and Red Sea, prompted the investors to book profit,” said Vinod Nair, Head of Research, Geojit Financial Services.
Gainers & losers
IndusInd Bank was the top Nifty loser, down 6.1 per cent, followed by Coal India and ONGC, which shed over 5 per cent each. SBI fell 4.2 per cent, while HDFC Life and HDFC Bank fell over 3 per cent each. Shares of Cipla rose 7 per cent on positive results from the company.
Most sectoral indices ended in the red, with Nifty Media and Nifty Realty falling the most. The former lost nearly 13 per cent after Zee and Sony merger was called off. PSU banks, railways and power utilities saw profit-booking after witnessing a sharp run-up in the recent past.
“Indian markets have run-up significantly in the last year and we could witness higher levels of volatility in the short-term,” said Pranav Haridasan, MD & CEO, Axis Securities, which has set a Nifty target of 24,000 for FY25, citing the country’s ability to attract domestic and foreign flows.
BoJ followed China and kept interest rates unchanged. Investors will now look to the US GDP data and the ECB rate decision due later this week for further cues.
“Global sentiments turned cautious after the Fitch Group statement that South Asian economies would be most affected, amid rising hostilities in the Red Sea due to Houthi attacks and India’s economic forecast faces a significant risk on account of a prolonged spell of disruptions,” said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.
Given weak global cues and mixed set of earnings released so far, the market is likely to consolidate and may drop a little further till the next set of fresh positive triggers, he added.
Mixed trend in Asia
Asian peers traded mixed on Tuesday, with Hang Seng gaining over 2.6 per cent. European indices traded marginally in the green. US stocks closed higher on Monday, with the Dow Jones Industrial Average finishing above the 38,000 for the first time and tech stocks adding to recent gains.
“By breaking the previous swing low of 21285, Nifty has conformed lower top and lower bottom formation on the daily chart, which indicates bearish trend reversal,” said Devarsh Vakil - Deputy Head Retail Research, HDFC Securities.
Nifty is now headed towards the next support zone of 20850-20900. On the upside, 21750 will act as the short term resistance.
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