Indian markets fell sharply today to end at one-month low, with pre-budget jitters weighing on sentiment. The blue-chip NSE Nifty 50 index fell nearly 2% to finish at 13,967.5 and the benchmark S&P BSE Sensex closed 937 points lower at 47,409 in their biggest one-day selloff since December 21. In just four sessions, Sensex has lost about 2,400 points, giving up all the gains of this year.
The Nifty Bank index fell 2.9%, with private sector lenders Axis Bank and HDFC Bank, declining 4% and 3.6% respectively. Market heavyweight RIL fell 2.2%.
“The market valuations have become stretched and most of the positives are factored in the price. The upcoming budget will be a tight rope walk for the government and negative surprises of higher taxation, that could impact consumption, which cannot be ruled out,” said Naveen Kulkarni, Chief Investment Officer, Axis Securities.
“Needless to say, the market has become jittery ahead of this major event. Investors should build for a defensive portfolio and also hold cash, as there will be good buying opportunities in the future.”
The Nifty Metals index closed 2.5% lower, with shares of Tata Steel Ltd and Hindalco falling about 4% each.
Here is what analysts said on today’s market fall:
Ajit Mishra, VP – Research, Religare Broking Ltd
“Caution ahead of the Union Budget and scheduled derivatives expiry also added to the pressure. We’re are not surprised with the recent fall and expect Nifty to test 13,700. However, it’s a healthy correction before the event and investors should use it to accumulate fundamentally sound counters on dips. Traders, on the other hand, should maintain extra caution due to the expected rise in volatility ahead.”
Deepak Jasani, Head of Retail Research, HDFC Securities
“The fall for the day was the largest in more than a month. Nifty has entered intermediate correction and 13773 is the next support. Now on the next bounce up it could face resistance in the 14281-14350 band.”
Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities
“The Nifty-50 broke the 14,000 level today even though other Asian and European markets are marginally down. The fall could be due to profit booking by FIIs and other participants in the F&O segment as tomorrow is the monthly expiry. Some unwinding of positions is visible before the budget event. Volatility is normally higher on the last two days of monthly expiry but this time the fall with higher volatility show cautiousness amongst market participants before the budget event. Earnings are coming out better than expected but profit booking is seen in most companies that have declared results so far barring a few cases. If Nifty-50 sustains below 14,000 for the next two days that the probability of it testing 13,000 goes up. We need to wait for tomorrow’s expiry closing to test whether Nifty-50 sustain the 14,000 mark.”
Vinod Nair, Head of Research at Geojit Financial Services.
“It is well-known that a fall in FIIs inflows will be the biggest risk to the liquidity-driven rally. Indian bourses mirrored mixed sentiment from global peers with a downward rally owing to consecutive days of FII selling. Barring defensive FMCG segment, all sectors traded in the red zone with banking and pharma stocks being the worst hit. The global markets were mixed today ahead of the US Fed meeting amid uncertainty over the US stimulus. We should expect higher volatility in the coming days’ given pre-budget event risk”
S Ranganathan, Head of Research at LKP Securities.
“Markets witnessed a 2% cut in Indices today even as the IMF put out an impressive 11.5% growth for India in 2021, the highest for any major economy globally. Autos, Metals & Financials bore the brunt of selling as we saw unwinding ahead of the Union Budget. Absence of FII buying this week too added to the nervousness in Wednesday’s afternoon trade”