The domestic equity market witnessed heavy selling pressure on Tuesday, with the Sensex and the Nifty falling over 1 per cent each, on continued sell off by foreign institutional investors (FIIs) and concerns over rising US dollar.
The BSE 30-share Sensex plunged 820.97 points, or 1.03 per cent, to end at 78,675.18, compared to the previous close of 79,496.15.
The broader Nifty lost 257.85 points, or 1.07 per cent, to finish at 23,883.45. The index had closed at 24,141.30 in the previous session.
On Tuesday, FIIs offloaded Rs 3,024.31 crore of local shares, while domestic institutional investors (DIIs) purchased Rs 1,854.46 crore of equities, according to the BSE’s provisional data. Since October 1, foreign investors have offloaded Rs 1.18 lakh crore of shares, the National Securities Depository Ltd’s (NSDL) data showed.
“FII-triggered selling pressure continued to impact the domestic market. The recent strengthening of the dollar, driven by aggressive ‘Trumponomics’ is adding to fears,” said Vinod Nair, Head of Research, Geojit Financial Services.
Mehta Equities Ltd Senior VP (Research) Prashanth Tapse said domestic earnings disappointment and weak Asian and European market cues fuelled another round of massive correction as key benchmark indices slumped for the 4th straight session.
“The expensive valuations of Indian markets and the rising bond yields coupled with worries of Trump’s likely protectionist policies going ahead has continued to fuel pessimism amongst the local investors,” Tapse said.
Global stocks paused their advance on Tuesday amid signs the rally had left valuations overextended and as investors remained worried about US President-elect Donald Trump’s policies. Investors also considered the dollar’s strength amid expectations that robust US economic growth and aggressive trade policies under a Trump presidency will drive inflation higher, said Deepak Jasani, Head of Retail Research at HDFC Securities.
Nifty fell for the fourth consecutive session on Tuesday and closed at the lowest in 4.5 months amidst dull buying interest which failed to offset the FPI sales. Broad market indices fell broadly in line with the Nifty.
“Nifty formed a long bear candle on Nov 12 and broke the near term support in the fall seen over the last few days. It now seems headed to 23,670. On bounces 24,151 may be tough to breach in the near term. While Nifty has remained oversold for some time and it may be late for some profit booking, we may still see sell on rises in the near term,” Jasani said.
Investors also turned risk averse to concerns the rise in domestic inflation, due to increasing food prices, along with depreciating rupee, which may influence the RBI’s monetary policy.
Consumer price index (CPI) accelerated to a 14-month high of 6.21 per cent in October, compared to 5.5 per cent in September. As CPI breached the upper tolerance band of the Reserve Bank of India (RBI), the cut in the repo rate may also get delayed, analysts said.
The government has given the RBI the mandate to keep inflation in the 2-6 per cent target band. The regulator has been targeting to keep inflation at 4 per cent on a durable basis.
On Tuesday, power, capital goods, FMCG and auto stocks came under selling pressure while realty and IT were relatively insulated.
