Equity benchmark indices Sensex and Nifty witnessed a sharp correction on Monday, erasing gains from the previous two sessions. The market sentiment was weighed down by heavy profit booking, unabated foreign fund outflows, and caution ahead of the crucial US Federal Reserve policy decision.
The 30-share BSE Sensex plunged 609.68 points, or 0.71 per cent, to close at 85,102.69. The index faced severe intraday volatility, plummeting as much as 836.78 points to hit a low of 84,875.59 before recovering marginally.
Simultaneously, the broader NSE Nifty 50 cracked the psychological 26,000 mark. The index declined by 225.90 points, or 0.86 per cent, to settle at 25,960.55. In intraday trade, the Nifty dropped 294.2 points to a low of 25,892.25.
Key Triggers for the Sell-off
Market analysts attributed the slump to a confluence of domestic and global factors:
- Profit Booking: After two consecutive days of gains, investors turned defensive, opting to book profits at higher levels.
- Foreign Fund Outflows: Foreign Institutional Investors (FIIs) continued their selling streak. Data indicates that FIIs offloaded equities worth significant amounts in recent sessions, dampening market liquidity and sentiment.
- US Fed Policy Caution: Investors remained on the sidelines ahead of the US Federal Reserve’s policy meeting scheduled for later this week. The outcome is expected to provide cues on the trajectory of global interest rates.
- Weak Rupee: The Indian rupee showed weakness, slipping below the 90 mark against the US dollar, further aggravating concerns regarding foreign inflows.
- Global Bond Yields: A surge in Japanese bond yields to multi-year highs sparked fears of a potential unwinding of the yen carry trade, adding to global volatility.
Top Gainers and Losers
The market breadth was largely negative, with bears dominating the session.
- Top Losers: The selling pressure was broad-based. Major laggards in the Sensex pack included InterGlobe Aviation (IndiGo), which saw a steep decline, followed by Bharat Electronics Ltd (BEL), Trent, Tata Steel, Bajaj Finance, Adani Ports, and State Bank of India (SBI). Other notable losers were Asian Paints, Tata Motors, Titan, and Larsen & Toubro.
- Top Gainers: Bucking the trend, select technology and banking stocks managed to close in the green. Tech Mahindra, HCL Technologies, Reliance Industries, and HDFC Bank were among the few constituents to end the day with gains.
Sectoral Performance
Sectoral indices reflected the overall bearish mood. The Nifty Realty index was the hardest hit, plunging over 3.5 per cent. It was followed by significant cuts in Media, Metal, PSU Bank, Consumer Durables, and Auto indices, each slipping over 1 per cent. The broader market indices, Nifty Midcap and Smallcap, also witnessed sharp cuts, underperforming the benchmarks.
Expert Commentary
Vinod Nair, Head of Research at Geojit Investments Ltd, observed, “The market experienced a broad-based decline, slipping below the 26,000-mark as investors turned cautious ahead of this week’s Fed policy decision. Despite robust domestic growth figures, short-term sentiment remains overshadowed by global monetary policy concerns and persistent FII outflows.”
Global Markets
Asian markets ended on a mixed note. South Korea’s KOSPI rose 1.34 per cent and Shanghai’s SSE Composite gained 0.54 per cent, while Hong Kong’s Hang Seng index fell 1.23 per cent. European markets were trading mixed during the afternoon session.
As the market awaits the US Fed’s decision, volatility is expected to persist in the coming sessions.
