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Benchmark equities rebounded after opening sharply lower on Monday, tracking weakness across Asian peers after a selloff in US markets on Friday, as investors expect a 50 bps rate hike by the Federal Reserve this week.

After falling around 600 points in intra-day trade, dragged by losses in IT and auto consumer durables stocks, the benchmark indices were able to erase most of the intraday losses and ended flat amid volatility.

The 30-share pack Sensex was down 84.88 points or 0.15 per cent to close at 56,975.99. Its broader peer NSE Nifty also fell 33.40 points or 0.20 per cent but settled below the 17,100 mark.

Indian financial markets will be closed on Tuesday for a holiday.

Market participants will also watch for signals about the future path for interest rates, the Fed‘s plans for reducing its balance sheet and its view on when inflationary pressures will recede.

“The recent hawkish turn by Fed has made investors extra cautious ahead of the upcoming Fed meeting triggering high volatility in the market. The rising dollar index, FII selling spree and elevated commodity prices further hammered the risk sentiment,” said Vinod Nair of Geojit Financial Services.

On the other hand, domestic numbers like GST collection, auto sales numbers and Manufacturing PMI for April gave a sense of an improving economic outlook, he added.

Some buying in metal, power and realty scrips also helped to trim losses.

From the Sensex pack, IndusInd Bank, NTPC, Power Grid, Tata Steel, HDFC and ITC managed to settled with gains.

On the other hand, Titan was the top loser, slipping nearly 3 per cent. It was followed by Wipro, Tech Mahindra, Infosys, Maruti Suzuki India and Asian Paints. Midcap and smallcap indices also ended in the red, falling around one percent each.

The market breadth was skewed in favour of bears. About 1,235 stocks advanced, 2,228 declined and 181 remained unchanged.

Banks led the recovery on expectations of higher credit growth this fiscal and the broader markets, despite being a bit sluggish ahead of a trading holiday on Tuesday, witnessed accumulation in select pockets like standalone refineries and hospitality, said S Ranganathan, Head of Research at LKP Securities. Nifty Bank recovered over 500 points to close above 36,000.

The Nifty IT index was the top loser after it declined 1.53 per cent, weighed by L&T Technology Services, MphasiS and Wipro. The Nifty Metal index rose 0.57 per cent, led by Tata Steel and NALCO.

Global Markets

Markets in Seoul and Tokyo settled lower, while Shanghai and Hong Kong were closed for holidays.

Bourses in Europe were also trading lower in the afternoon session. US stock futures were higher during early morning trading after Nasdaq posted its worst month since 2008 on Friday. Meanwhile, international oil benchmark Brent crude declined 2.61 per cent to $104.3 per barrel.

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