Indices halt two-day rally; Sensex falls 715 points; Nifty ends below 17,200 marks

The S&P BSE Sensex fell 714.53 points (1.23 per cent) to settle at 57,197.15 while the Nifty 50 declined 220.65 points (1.27 per cent) to end at 17,171.95. Both the indices had opened around 0.5 per cent lower earlier in the day and slipped further as the session progressed with the Sensex touching a low of 57,134.72 and the broader Nifty hitting 17,149.20.

On the BSE benchmark, State Bank of India (SBI), Hindustan Unilever (HUL), IndusInd Bank, Dr. Reddy’s Laboratories, Axis Bank, Bajaj Finserv, Infosys and ICICI Bank were the top losers of the day. On the other hand, Mahindra & Mahindra (M&M), Bharti Airtel, Maruti Suzuki India, Asian Paints, ITC and HCL Technologies ended in the green.

Among the broader market indices, the S&P BSE MidCap ended at 24.698.37, down 175.41 points (0.71 per cent) while the S&P BSE SmallCap settled at 29.247.98, down 110.45 points (0.38 per cent). The volatility index or India VIX on NSE rose 2.80 per cent to 18.3525.

“The Indian equity markets have been gyrating in the past few days after a healthy pullback witnessed since the geopolitical crisis-led lows seen in the early part of March. While the headline indices seem to be in a consolidation mode, the larger activity seems to have shifted to the broader markets, with a large number of small caps and midcaps seeing greater market participation, especially in select sectors such as sugar, fertilisers, textiles, paper, etc.” said Milind Muchhala, Executive Director at Julius Baer.

He further noted, “The markets seem to be slightly cautiously positioned, as the Q4FY22 earnings season has begun on a mixed note with small disappointments from a couple of large sectoral majors. Hence, investors might prefer to wait out for more results to be announced and hear out the accompanying commentaries to gauge in case there are any concerns of earnings cuts creeping in. Also, the impending concerns of elevated commodity prices due to geopolitical situation and supply chain challenges, and with increasing expectations of a harsher hike by the US Fed, the market may continue to witness higher volatility in the near term. A prolonged geopolitical situation and elevated prices can gradually start weighing on demand, profitability and growth estimates.”

Lastly, he added that “the government seems to be getting ready to launch the mega IPO of LIC, which may also put some near-term pressure for the secondary markets due to the large supply of fresh paper. We have been slightly cautious on the markets since the past few weeks and suggest creating some liquidity in the recent pullback, as the uncertainty and volatility is likely to continue for some more time with too many moving parts, providing intermittent opportunities.”

Global market

World stocks fell to five-week lows and bond yields rose on Friday as investors fretted about rate hikes in the United States and the euro zone, while the yuan struck a seven-month low as lockdowns in Shanghai hit China’s growth prospects.

MSCI’s world equities index was down 0.41 per cent at its lowest since mid-March, and was heading for a 0.7 per cent drop on the week. S&P futures were 0.18 per cent softer after Wall Street indexes fell on Thursday, with the S&P 500 down 1.5 per cent and the Nasdaq down 2 per cent. European stocks dropped 1.06 per cent, with France’s CAC 40 down 1.39 per cent ahead of Sunday’s presidential run-off vote. Britain’s FTSE fell 0.52 per cent.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1 per cent to a five-week low, weighed down by a 1.6 per cent loss for Australia’s resource-heavy index and a 0.86 per cent drop in South Korean shares. Japan’s Nikkei declined 1.63 per cent.

-global market input from Reuters