Indian equity indices extended losses in Wednesday’s trade amid negative cues from global peers. Weak economic data from the United States that hinted at a possible recession and downbeat growth outlook from companies also weighed on sentiments. Selling was seen across all sectors barring auto stocks.
BSE Sensex was trading 850 points or 1.39% lower at 60,128 while Nifty50 was trading at 17,865, down 252 points or 1.40% at around 11.30 am.
In the Sensex pack, barring
Suzuki, and all stocks traded with cuts. SBI, L&T, and were the top losers, down 2% each.
Sectorally, Nifty PSU Bank fell 0.52% and Nifty IT plunged 0.44%. Nifty Financial Services and Nifty Consumer Durables also opened lower. Whereas in the broader market, Nifty Smallcap50 declined 0.38% and Nifty Midcap50 dropped 0.49%.
“The 18200 Nifty has become a major resistance level which is keeping the Nifty in the narrow band of 17800-18200. Now, it appears that a major trigger is necessary to break this range either on the upside or the downside,” V K Vijayakumar, Chief Investment Strategist at
Two major events of February 1st – the Union Budget and the Fed decision on interest rate – have the potential to break this narrow range, Vijayakumar added.
Here are the five key factors behind the bloodbath on Dalal Street today:
- FII selling
Foreign institutional investors who have been on a selling spree on Dalal Street were net sellers to the tune of Rs 760.51 crore yesterday. The total outflow so far in the month has crossed the Rs 17,000 crore mark as FIIs are said to be favouring relatively cheaper markets like that of China.
- Selloff in Adani stocks
Adani Ports and Adani Enterprises were among the top losers in Nifty pack. The slide comes after short-seller Hindenburg Research said it holds short positions in the Adani Group companies through U.S.-traded bonds and non-Indian-traded derivative instruments, and flagged risks to the financials of key companies.
All 10 Adani Group stocks were in the red this morning with Adani Ports dropping the most at 5% to hit day’s low at Rs 723. Other top losers in the pack included Adani Power, Adani Wilmar and Ambuja Cement – all of them lost 4% each.
- F&O expiry
A part of the volatility today can also be attributed to the weekly and monthly derivative expiry today. F&O contracts expire on Thursday but tomorrow being a market holiday on account of Republic Day celebrations, the expiry day has been preponed today.
Nifty has been consolidating in between 17,777 to 18,250 zones from the last 18 trading sessions where declines are being bought but absence of follow up buying is clearly viable in the market, said Chandan Taparia of Motilal Oswal.
- Weak global market cues
US and European stock futures fell Wednesday while Asian stocks eked out small gains amid downbeat investor sentiment following mixed corporate earnings.
Contracts for the Nasdaq 100 fell 0.7% after a slight decline in the underlying index on Tuesday, with a slowing sales outlook for Microsoft Corp.’s cloud-computing business setting the tone as Asian trading got underway. Futures for the S&P 500 and Euro Stoxx 50 benchmarks also dropped.
Wall Street stocks were mixed at the end of a choppy session Tuesday as investors digested an uneven set of results from US corporate giants including Verizon and 3M. The Dow Jones Industrial Average finished up 0.3% at 33,734. The broad-based S&P 500 slipped 0.1% to 4,017, while the tech-rich Nasdaq Composite Index dropped 0.3% to 11,334.
- Pre-Budget nervousness and Fed fear
Traders were cautious ahead of two big events in the coming week – Union Budget and Fed meeting outcome. Both events are coinciding on February 1, ahead of which Nifty has been trading in a narrow band of 17800-18200. A good budget and positive commentary from the Fed can break the upper band.
“Any negative budget proposal like raising the rate of long-term capital gains tax or a worse-than-expected hawkish Fed can break the lower end of the range,” said Dr. V K Vijayakumar.
- Crude prices rise
Crude oil prices rebounded on Wednesday as demand recovery hopes in top importer China following its exit from COVID-19 pandemic curbs provided support after prices dropped in the previous session on concerns about global economic growth.
Brent crude futures gained 0.42%, to $86.50 per barrel. US West Texas Intermediate (WTI) crude futures rose 0.32%, to $80.39 per barrel.
(With inputs from agencies)