Sensex tanks 704 pts; Nifty ends below 17,000; top factors that triggered Tuesday’s selloff

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Domestic equity markets took a sharp ‘U-turn’ to wipe off all the early gains on Tuesday, thanks to the fag-end selling which dragged the benchmark indices lower for the straight fifth session.

Weakness in the European markets amid the rising tensions between Russia and Ukraine weighed on the market sentiments. Expectations of rate hike from Fed amid the rising inflation also jittered the markets.

Intense selling in HDFC twins and Infosys contributed about 590 point fall in the BSE barometer. However, buying in

gave some relief to the traders.



BSE Sensex gyrated in the range of 1,450 points during the session, whereas Nifty 50 index settled below the 17,000 mark, its lowest levels since March 15.

The 30-share pack Sensex tanked 703.59 points or 1.23 per cent to close at 56,463.15. Its broader peer NSE Nifty50 also tumbled 215 points or 1.25 per cent to end the session at 16,958.65.

Mohit Nigam, Head – PMS at Hem Securities, said that benchmark indices erased day’s gain and ended the day’s session on a negative note, while Sensex and Nifty 50 ended a session with losses.

“European shares were lower on Tuesday, while yields on 10-year U.S. inflation-linked bonds were close to turning positive for the first time in two years, as the prospect of aggressive Fed tightening to rein in inflation kept investors on edge,” he added.

Equity investors turned poorer by Rs 4.18 lakh crore during the session as the marketcap of all BSE listed companies dropped to Rs 265.48 lakh crore from Rs 269.66 lakh crore.

HDFC twins, Infosys continue to drag benchmarks

It was another day of weakness for the three heavyweights. TCS too fared badly. The four stocks accounted for nearly 28 per cent of Nifty50 weightage.

HDFC plunged 6.1 per cent to close at Rs 2,125 on BSE.

was down for the ninth straight session. It fell 3.73 per cent to Rs 1,343.30. Infosys fell 3.55 per cent to Rs 1,563.95 while TCS declined 1.53 per cent to Rs 3,474.30. The four stocks contributed nearly 650 points negatively to the Sensex fall.


Intensifying Russia-Ukraine war


European stocks, which opened for trading after Easter holiday, did not have a good opening. Markets from France to Germany and from UK to Italy were trading 1-1.7 per cent on concerns over intensifying Russia-Ukraine war.

Russian markets were also down nearly 3 per cent after the Russian foreign minister said that Moscow’s campaign in Ukraine is entering a new stage.

Sergey Lavrov said in an interview with an Indian television broadcast that “the operation is continuing, and another phase of this operation is starting now.” Lavrov’s statement followed Ukrainian statements that Russia on Monday launched an offensive in the country’s eastern industrial heartland, Donbas, AP reported.


Technical weakness


Nifty50 had made a ‘Death Cross’ in the previous session, which was a negative development. To add to that the index could not respect a key support of 17,000 level, which intensified the selling pressure.

“A late sell-off from around 17,230 levels seems to have tilted the tide decisively in favour of the bears. In this process, the Nifty50 breached its critical supports to settle below the 200-day moving average. However, at an intraday low of 16824 levels, the said index tested the 200-day EMA and bounced back. It thus remains critical for the index to sustain above 16,820, as a breach of this can drag it down further towards 16,500 level,” said Mazhar Mohammad of
Chartviewindia.in.


Strengthening dollar


Dollar index, which usually has an inverse relationship with equities, hit a two-year high of 101 on Tuesday. A rise in the dollar makes non dollar-denominated assets unattractive.

Investors globally expect the US Fed to raise interest rates by 50 basis points more than once going ahead, which has also increased bond yields. A rise in bond yields makes earnings yields unattractive.

“Fed minutes released earlier suggest that officials at the central bank have also started to discuss about balance sheet trimming, another tool to manage its fight against inflation. Going ahead, hawkish stance by the Federal Reserve is likely to extend gains for the greenback. We expect the dollar index to test levels of 103.20 in the near future and downside could be restricted to levels of 97.20,” said Gaurang Somaiya of Motilal Oswal Financial Services.

MARKET SNAPSHOT

Gainers and Losers

HDFC emerged as the top loser in the Nifty50 pack, with a 6 per cent fall, HDFC Life plunged over 5 per cent. SBI Life, HDFC Bank, Tata Consumer Products, ITC, Cipla, Adani Ports, Tech Mahindra and JSW Steel dropped 4 per cent each.

Apollo Hospitals led the gainers with a 5 per cent rally. It was followed by Coal India and Reliance, which rallied 3 per cent each. BPCL, ICICI Bank and ONGC also manage to settle in green.

In the cash market, INEOS Styrolution, Chambal Fertilizers, Seshasayee Paper, Asian Granito, Emami Paper, Arman Financial, Share India, Solara Active Pharma and Mindtree were among the biggest losers, falling between to 8-20 per cent.

On the contrary, MRPL, Chennai Petrochem, Prozone Intu Properties, Bodal Chemicals, Sunflat Iron, HSIL, State Trading Corp and Saint Gobain advanced between 6-9 per cent each.


Sectoral Matrix


Barring Nifty Oil & Gas index, all other NSE’s sectoral indices settled in red. Nifty IT and FMCG indices tumbled 3 per cent each, followed by a 2.5 per cent drop in Nifty Realty index.

Nifty Financial Services index and Media index dropped 2 per cent each. On the other hand, Broader markets performed in line with the headline peers, falling over a per cent each.

“Intensification of geo-political tension and hyperinflation as crude & metal price rises worried the market, ” said Vinod Nair, Head of Research at Geojit Financial Services.

“The Indian IT sector continued to lead the downtrend following sectorial headwinds highlighted in weak Q4 results, he added. “Quick sell-off was witnessed during the closing hours led by banking stocks due to FII selling as the global market weakened.”


Index Statistics


Market breadth was in favour of losers as about 2,179 shares declined, 1,234 shares advanced and 123 shares remained unchanged. 119 stocks tested their 52-week highs, whereas 11 others tested their 52-week lows. 18 stocks hit their upper circuit limit, while merely three others were locked in the lower circuit.



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