Bulls took a breather on Thursday as domestic benchmark indices settled in red after a two-day recovery, thanks to the negative global cues. Bears emerged victorious during the fag-end of the session as the selling pressure mounted in the blue-chip counters.
Prior to this, the US Federal Reserve increased the interest rates by another 25 basis points (bps), marking its ninth increase in a row, amid the worries in the banking sector. Benchmark indices took a hit of squeezed-out liquidity as global investors will be looking to dump Indian equities.
For the day, BSE’s barometer Sensex dropped more than 289.31 points, or 0.50 per cent, to 57,925.28, whereas NSE’s Nifty50 shed 75 points, or 0.44 per cent, to 17,076.90. Broader markets dropped in tandem with the headline peers as BSE midcap and smallcap indices ended in the red. Fear gauge India VIX calmed more than 2 per cent to 14.49-level.
Banking stocks came under fire that dragged key benchmark indices lower as a sharp decline in the US markets a day before cautioned investors. Although most of the other Asian indices eked out gains cheering that the US Fed may go soft on rate hikes going ahead, local markets failed to follow suit as higher valuations, said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.
“Technically, the Nifty once again failed to clear the short-term resistance of 17,210. The index has also formed a double top formation on intraday charts, indicating further weakness from the current levels. For the bulls, 17,050-17,000 would act as important support zones while 17,200-17,250 could be key resistance areas for the short-term traders. However, below 16950, the uptrend would be vulnerable,” he said.
Among the sectors, Nifty PSU Bank index declined about 2 per cent, followed by a one per cent fall in Nifty Realty index. Nifty Private Bank, IT and Financial Services indices also settled with big cuts. However, Nifty Auto, FMCG, Pharma and Metal indices settled with gains.
In the Nifty50 pack, State Bank of India, Bajaj Auto, Kotak Mahindra Bank and HCL Technologies dropped 2 per cent, each. Asian Paints, IndusInd Bank, Reliance Industries and Wipro also settled significantly lower. On the contrary, Hindalco, Maruti Suzuki and Nestle India rose over a per cent, each. ONGC, Tata Motors, ITC, Bharti Airtel and Sun Pharma were other key gainers.
Although the Fed’s decision to increase rates by 25 basis points was in line with expectations, concerns were raised by the US Treasury Secretary’s statement that blanket insurance for all deposits was not being considered, said Vinod Nair, Head of Research at Geojit Financial Services.
“The domestic market attempted to recoup its initial losses with the help of favourable US futures as the Fed hinted at its plan to pause rate hikes sooner. However, the recovery was short-lived due to a sluggish start in the European market led by a 50-bps hike by the Swiss National Bank,” he said.
A total of 3,634 shares were traded on BSE on Wednesday, of which 2,055 settled lower. 1,447 stocks ended the session with gains, while 132 shares remained unchanged. A total of 194 shares hit their upper circuit, whereas 134 tested the lower circuit levels for the day.
In the broader markets, AGI Greenpac dropped about 10 per cent after a review by CARE Ratings which flagged some negative implications. Vakrangee and Black Box shed up to 9 per cent, whereas Vedanta shed 5 per cent, each, after stake sale buzz by its promoter. HAL was down 5 per cent, each, as the government’s OFS kicked off.
On the other hand, Sun Pharma Advanced Research Company and Precision Camshafts rallied about 12 per cent, each, followed by an 11 per cent rise in JK Tyre and Industries. GR Infra rose over 6 per cent after multiple order wins, followed by a similar rise in Star Cement.
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