The benchmark Sensex’s seven-day winning streak got snapped on Tuesday as investors reassessed risks such as hawkish central bank policies and prospects of earnings downgrade. Declines in consumer good stocks, index heavyweight Reliance Industries and banking stocks weighed, dragging the markets lower.
The Sensex shed 288 points, or 0.5 per cent to finish at 59,544, while the Nifty 50 index fell 74 points, or 0.42 per cent, to 17,656. In the preceding seven trading sessions, the Sensex had risen nearly 2,600 points, or 4.54 per cent—its longest gaining streak in nearly a year. The Nifty added 717 points, or 4.2 per cent, during this period.
Shares of top FMCG firm Hindustan Unilever fell close to three per cent for a second straight day on concerns around weak demand recovery. Shares of Nestle India dropped 2.8 per cent. Nestle India and Hindustan Unilever were top decliners among Sensex’s 30 companies. Heavyweight RIL fell 1.5 per cent and was the biggest drag on the index.
Nine of the 19 BSE sectoral indices ended with losses, with the FMCG index falling the most at 1.1 per cent.
“The domestic market pared its early gains with FMCG and private banks pressuring the benchmark. Market attention has shifted to central bank policy announcements since the European Central Bank is expected to hike interest rates at its upcoming policy meeting. The impending US GDP data will give additional clarity to the expectation that the Fed will temper its aggression in regard to rate hikes,” said Vinod Nair, Head of Research at Geojit Financial Services.
On opening, the markets had edged higher, with the Sensex touching an intra-day high of 60,081, and the Nifty climbing to 17,812. On Tuesday, overseas funds sold shares worth Rs 247 crore, while domestic institutions were buyers to the tune of Rs 873 crore.
“Markets witnessed profit taking amid mixed global cues. The trend was mixed on the sectoral front wherein FMCG and energy majors were under pressure while auto and IT tried to save the day. Interestingly, the broader indices outperformed the benchmark and ended almost on a flat note,” said Ajit Mishra, VP – Research, Religare Broking.
The Nifty Midcap 100 rose 0.45 per cent, while the Nifty Smallcap 100 index fell 0.13 per cent on Tuesday. The India Vix index fell 3 per cent to 16.9.
During the ceremonial one-hour session on Monday evening, the benchmark indices had risen close to 1 per cent in what was their biggest Muhurat day gain in 14 years.
During Samvat 2078, the Sensex and the Nifty had dropped over one per cent amid a sharp retreat in most global markets due to rising bond yields following the US Federal Reserve’s hawkish pivot to control runway inflation.
Market players are expecting the benchmark indices to post double-digit gains during Samvat 2079.
Over the next one year, the market faces several headwinds and tailwinds. Fears of recession, sustained monetary tightening and rising geopolitical tensions are factors that could weigh on the performance. On the other hand, optimism that the worst of inflation is over and an expected pick up in the domestic economy coupled with hopes of improvement in corporate financials could support the markets.