Sensex, Nifty end a flat note on Tuesday

The strong upward momentum in the markets fizzled out on Tuesday, as the equities ended with the day on a flat note. The Sensex was down by 8.41 points (0.02%) to close at 37,973.22 and the Nifty was down by 5.15 points (0.05%) to close at 11,222.4. The market’s movements have also been impacted by selling from foreign portfolio investors who have pulled out from Indian equities for the first time in six months.

Foreign investors have sold equities worth $1.39 billion in total from the Indian markets in the last seven trading sessions, while the net outflow for September so far according to NSDL stands at $586.7 million. The markets tracking global cues remained cautious ahead of the first presidential debate in the US. The Indian markets were also dragged by financials with Nifty Bank declining as much as 1.17%.

The strong movements in the markets over the last few trading sessions have been caused by the volatility in financial stocks especially bank shares to an extent. On Tuesday, financials drove the market volatility leading to the benchmarks swinging between gains and losses. The weightage of the financial sector has however come down from 41.98% in 2019 to 34.96%. Banking stocks saw a decline after the Reserve Bank of India (RBI) postponed the monetary policy committee’s meeting. Additionally, they have been facing volatility on account of the Supreme Court hearing on interest waiver, various RBI reforms and the economic impact of the loan moratorium as well as Covid-19 on the sector. Sanjeev Hota, head of research, Sharekhan by BNP Paribas, said, “The sector weightage of Nifty Bank has already down by almost 700bps in the last eight months, and given the macro economy slowdown and regulatory overhang, banking and NBFCs could see further softness in near term.The banking sector to an extent has contributed to the market volatility but the market movements are also largely impacted by global market volatility.”