Sensex, Nifty crash over 1.8% in line with global slump

On Tuesday, the 30-share index, Sensex, fell 660.63 points or 1.8% to close at 36,033.6.

Indian shares ended Tuesday in the red, on muted global cues, rising coronavirus cases and profit taking. Foreign portfolio investors (FPIs) have remained marginal sellers so far in Indian equities, pulling out $168.69 million in total, so far in July. On Tuesday, the 30-share index, Sensex, fell 660.63 points or 1.8% to close at 36,033.6. The benchmark Nifty tanked by 195.81 points or 1.8% to close at 10,607.35.

FPI flows into Indian equities have tapered down since June, where they bought stocks worth $2.7 billion. July, so far, has captured marginal outflows against the buying witnessed in May and June, which stood at $1.3 billion and $2.7 billion, respectively. FPIs on Monday, in line with the gains of the equity markets, bought stocks worth $29.1 million, revealed provisional data. Domestic institutional investors sold stocks worth $195.4 million. The flows to Indian equity markets have been volatile ever since the outflow of $8.3 billion, the stock market witnessed in March. According to experts, FPIs have been neutral so far.

Shrikant Chouhan, executive vice-president (equity technical research), Kotak Securities, said, “Despite a sharp upsurge in US and other Asian markets, domestic equities corrected sharply. During the day, the Nifty fell to the level of 10560, which is the final support-level of the market, but it could not return strongly. Buyers are extremely cautious and do not want to make any major commitments until the conditions are favourable in global markets. If the markets are really strong, the Nifty will not be able to go below the 10500-level.”

The Nifty50, which started the day’s trading session with a gap-down opening, traded in losses throughout the trading session. It touched a low point of 10,562.9 and ended the day off the session’s lows, giving up the crucial 10,800-mark. According to Amar Deo Singh, head advisory, Angel Broking, the equity markets are likely to see heightened volatility in the coming few days. “Markets witness sharp sell-off today (Tuesday) with financials bearing the greatest brunt, on the back of weak global cues, and concerns with regard to rising Covid-19 cases in the US. Technically, too, markets are trading closer to key resistance-levels, so profit-booking is being witnessed. Going forward, we could see a rise in India VIX, indicating short-term concerns and fears of the investor community,” said Singh. India VIX jumped to 26.6 up from its previous close of 25.25.

The Indian stock markets on Tuesday were dragged down by the financial stocks, which were among the biggest losers in the day’s trading session. Nifty Bank slid downward for the third straight session, falling by as much as 697 points or 3.16% to close at 21,392.20. In the last three sessions, the benchmark has shed 1363.3 points. The banking stocks have been underperforming the equity markets since the recovery rally of April on account of asset quality concerns and the impact of the recession in the economy on credit growth.

Markets globally were trading in losses after the US markets in their previous trading session cut their gains in the last hour of trade. S&P 500 declined by as much as 0.94% and Dow Jones traded flat up by 0.04%. The US markets gave up their gains after briefly turning positive for the year due to surging Covid-19 cases. This has forced many states in the US to rethink their plans for reopening the economy. The losses from the US markets were extended by Asian indices, which declined and witnessed profit taking. Bourses in South Korea, China and Hong Kong declined between 0.1% and 1.14%. Additionally, markets in Europe were also trading with losses with bourses in the United Kingdom, Germany, and France, declining between 0.45% and 1.62%. The Dow Jones Mini Futures were up by 96 points at the time of press indicating a positive start for the US markets.

The futures and options segment saw volumes worth Rs 15.1 lakh on Tuesday against the six-month average of Rs 14.9 lakh, according to the data on NSE. The bourses have been witnessing a rise in volumes — thanks to the improvement in retail participation. The biggest losers on Nifty were IndusInd Bank, Axis Bank, Eicher Motors, Zee Entertainment as well as Adani Ports and SEZ down by 5.49%, 4.9%, 4.47%, 4.32%, and 3.7%, respectively. The only gainers were Dr Reddy’s Laboratories, Titan, and Bharti Airtel up by 1.94%, 0.92%, and 0.27%, respectively. Sectorally, the biggest losers were Nifty Private Bank, Nifty Bank, Nifty PSU Bank, Nifty Metal and Nifty Financial Services. Among the broader markets, Nifty Midcap and Nifty Smallcap were down by 1.08% and 1.49%, respectively.