Indian stock market saw sharp upwings and downswings on Tuesday, with Sensex and Nifty erasing all morning gains to close in the red as the rupee tumbled to a fresh lifetime low against the US dollar.
Sensex fell around 114 points to close at 75,201, while the Nifty 50 index declined 32 points to end the session at 23,618. This came even as India VIX, which measures volatility in markets, declined over 5% to 18.57.
Kotak Mahindra Bank, Titan, UltraTech Cement, Bharti Airtel, Sun Pharma, Adani Ports, IndiGo, Hindustan Unilever, Reliance Industries, HDFC Bank, Maruti Suzuki and ICICI Bank shares declined up to 2% to lead losses. Bucking the trend, IT stocks including Infosys, HCL Technologies, Tech Mahindra and TCS gained up to 4% to lead gains.
Broader markets outperformed benchmarks, with Nifty Smallcap 100 and Nifty Midcap 100 indices closing around 1% higher each. Sectorally, Nifty Private Bank index declined over 0.7% to lead losses, while Nifty IT jumped over 3% to lead gains. Around 2,152 stocks advanced on NSE, while 1,109 stocks declined and 94 remained unchanged.
Overall sentiment is likely to remain tilted in favour of the bears in the short term, said Rupak De, Senior Technical Analyst at LKP Securities. “The 23,800 zone continues to act as a crucial resistance level [for Nifty], and unless the index decisively moves above it, sellers may regain control at any point. On the downside, immediate support is placed at 23400, below which selling pressure could intensify further,” he said.
Rupee hits fresh lifetime low
Rupee fell to a record low for a sixth consecutive day, ending lower for eight sessions in a row on Tuesday. The Indian currency tumbled to a record closing low of 96.5325 per dollar, compared to the 96.3450 level it settled at on Monday. The currency touched a record intraday low of 96.6150 and has fallen 6.1% since the Iran war broke out in late February.
Bond yields cool down
After soaring to record high levels yesterday, bond yields cooled down slightly today. The yield on benchmark US 10-year notes fell to 4.607%. The 30-year bond yield surged to 5.147%. This came after a global debt selloff, which led to falling bond prices and rising yields.
FIIs continue buying Indian equities for 3rd day straight
Foreign investors remained net buyers of Indian equities for the third consecutive session, purchasing Indian shares worth Rs 2,814 crore on Monday, according to provisional data on NSE. However, this is negligible when compared to the massive selloff seen earlier. FII remained net sellers of Indian equities in 8 out of 11 sessions in May so far.
"FIIs turning buyers, though not a trend yet, is an indication that valuations are becoming attractive in India. Also, the concerns of bubble valuations in AI stocks are increasing. If the FII buying becomes a trend, largecaps in financials, particularly in leading banks, will be the segment to move up since their valuations are attractive and the segment has growth potential,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
What lies ahead?
Broadly, at the macro level, the concerns surrounding growth, inflation and currency depreciation persist, Vijayakumar cautioned. “Therefore, investors should focus on sectors which will be least impacted by these potential headwinds. Pharmaceuticals, power-related stocks and defence stocks will be the least affected by a potential slowdown,” he said.
“Q4 results have been good, in many cases better than expected. This is an indication that the economy had started to recover in response to the fiscal and monetary stimulus measures of last year, before being impacted by the energy crisis. Therefore, if there is a quick resolution of the Hormuz crisis, the economy may recover fast, and the slowdown expected this year will not be as severe as feared,” he added.
(With inputs from agencies)
(Disclaimer: Recommendations, suggestions, views and opinions given by experts are their own. These do not represent the views of The Economic Times)
