The benchmark indices retreated more than 1% on Wednesday amid weak global cues and volatility on the monthly futures and options (F&O) expiry day.
Traders liquidated their positions ahead of the Adani Enterprises FPO while migration from T+2 to T+1 settlement for bluechip companies starting Friday led to some offloading, said experts.
The BSE Sensex fell 773 points or 1.27% to 60,205 on Wednesday while the 50-share Nifty slid 226.35 points or 1.25% to 17,891.
Volumes on the NSE were higher than recent average but lower than the usual volumes on monthly F&O expiry day. The advance decline ratio fell to 0.34:1.
Top losers in the Nifty 50 index were Adani Ports (6.3%), IndusInd Bank (4.6%) and SBI (4.3%). Adani group stocks came under pressure after a US-based forensic firm flagged concerns on the group’s debt levels and stock manipulation.
Among sectoral indices, Bank Nifty fell 2.5%, Nifty PSU Bank tanked 3.6%, Nifty IT dropped 0.9% and Nifty Pharma dipped 1.2%.
FPIs sold shares worth Rs 2,393 crore, according to provisional figures on Wednesday.FPIs have net sold shares to the tune of over $2 billion this month. DIIs bought shares worth Rs 1,378 crore on Wednesday.
“Indian equities witnessed significant sell-off as the market appeared apprehensive ahead of the upcoming Union Budget and Fed meeting next week. Sentiments were dampened by persistent FII selling, where funds are being shifted to other EMs as a result of attractive valuations. Furthermore, a weak economic growth outlook that stoked recession fears pulled down global markets,” said Vinod Nair, Head of Research at Geojit Financial Services.
Asian equities scaled their highest levels in seven months on Wednesday after some regional markets reopened after holidays, betting on the Chinese economic recovery this year. Japan’s Nikkei 225 rose 0.35% to 27,395 and South Korea’s Kospi rose 1.39% to 2,428.
European indices were trading in the red at 6 pm IST. Worries that central banks might need to keep interest rates higher for longer dampened sentiment.
“The month of January has seen very tepid market volumes, with daily cash market volumes of Rs 47,000 crore, compared with Rs 56,000 crore in December quarter. This is despite strong institutional participation, which is up to an average of 27% of daily market volumes compared with 22% in December quarter. This points to lackluster sentiment from domestic retail participants, and is also reflected in futures segment,” said S Hariharan, Head, Institutional Equity Sales, Emkay Global Financial Services.
“January rollover spreads for futures positions have been cheaper than the last three months, reflecting relative reluctance from long positions to roll positions, according to Hariharan.
“Foreign flows have been relatively weak as relative valuation attraction in China has drawn incremental flows, but this phenomenon is expected to be overcome by strong growth numbers that Indian corporates continue to report,” he said.