The Indian stock market indices, Sensex and Nifty 50, pared early gains to trade 1.5% lower each on Tuesday dragged by heavy selling in financial heavyweights led by HDFC Bank. Heavy beating was witnessed in broader markets as the Nifty Midcap 100 and the Nifty Smallcap 100 indices falling over 3 each%. Barring Nifty Pharma, all other sectoral indices were trading in the red with Nifty Media cracking 13%, followed by Nifty Realty down 5.1%, Nifty PSU Bank down 4.5%, while Nifty Metal and Nifty Oil & Gas cracking 3.5% each. Among stocks, Zee Entertainment shares plunged 30% intraday after its failed merger with the local unit of Japan's Sony Corp stirred concerns about its survival in a highly competitive industry.
Geopolitical concerns: Tensions in the Middle East and the Red Sea escalated, denting investors sentiment. “Tensions in West Asia and the Red Sea are areas of serious concern. If something goes wrong, the market will be impacted since valuations are high. Therefore, even when optimistic, investors should be cautious," said VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
Bank stocks: Sell-off in bank stocks led the decline in overall markets pushing Bank Nifty down more than 2%, while Nifty PSU Bank index plunged 4.5%. “HDFC Bank continues to see weakness due to liquidations from foreign investors, while small- and mid-cap indexes are undergoing long-awaited corrections after the run-up in valuations," said Saurabh Jain, assistance vice president for research at SMC Global Securities.
Fall in index heavyweights: Index heavyweights like HDFC Bank, Reliance Industries, SBI, Coal India, Axis Bank, IndusInd Bank, Tata Motors, among many others declined anywhere between 2%-4% each.
FII Selling: Sustained outflows of foreign funds from domestic equity market also dented sentiment. Foreign institutional investors (FII) have offloaded Indian equities worth more than ₹23,000 crore in January so far, as per stock exchange data.
Technical factors: The Nifty 50 index remained within the range of 21,500-21,700. However, on Tuesday, it broke below the 21,500 level, which analysts believe might trigger a correction towards 21,300 and below. In the case of Bank Nifty, the level of 45,500 was considered a strong support, which the index broke today. “A close below the crucial support of 45,600 might instigate a substantial downside correction towards 44,000," said Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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