Profit booking in heavyweights dragged benchmark indices on Tuesday, even as the broader market fared reasonably well with both BSE Midcap and SmallCap rising 1.3% each. Hardening oil prices and worries over aggressive rate hike by the Federal Reserve, in the face of the two-year and 10-year US Treasury yield curve inversion, also weighed on investor sentiment. The Sensex and Nifty were the worst performing benchmarks in the Asian region on Tuesday.
The HDFC twins, which surged about 10% in previous day’s trade fell 2%-3% on Tuesday, contributing 282 points to the Sensex’s fall. The largest company by market capitalisation – Reliance Industries – added another 115 points to the Index’ slide. The Sensex had surged 2,043 points or 3.5% in two sessions through Monday. The yield on US ten-year benchmark rose 8 basis points (bps) to 2.48% on Tuesday.
While the Sensex slid 435.24 points or 0.72% to end the session at 60,176.50 points, the broader Nifty ended on a negative note and most importantly, below the psychological 18,000 mark. The Nifty50 closed 0.53% lower at 17,957.40 points. For Nifty, now the support is seen at its 200 DMA of 17,100 level with intraday support at 17683 mark. “Cautious market mood prevailed at Dalal Street as aggressive traders looked to book profits in HDFC twins, which slipped around 2-3%. Investors also weighed the hawkish Fed expectations, in the face of the two-year and 10-year US Treasury yield curve inversion. The street is expecting the Fed to announce 50 basis point rate hikes at the May, June and July meetings,” said Prashanth Tapse, VP (research) at Mehta Equities.
Meanwhile, the rupee continued to gain in the trade, having appreciated 1.4% against the greenback over the last seven sessions. The local currency gained 22 paise to end the session at 75.33 against the US dollar. “Exporter selling and lumpy corporates were major drivers of rupee appreciation. With oil prices stable, the rupee is seeing some FPI inflows as well,” observed Anindya Banerjee, VP, Currency & Interest Rate Derivatives at Kotak Securities. Banerjee expects a range of 75.00 and 75.80 on spot, over the near term.
Both foreign and local institutional investors bought shares on Tuesday. While FPIs acquired $49.76 million worth of shares, domestic institutional investors shopped for $13.99 million, provisional data on exchanges showed. Of the 3,507 stocks traded on the BSE, 2,306 scrips ended the day in the green with 15 of the 19 sectoral indices gaining in the trade. BSE Power and Utilities surged the most on Tuesday with 3.3% gains each.