Sharp decline in HDFC Twins amid profit booking and trimming of positions in IT stocks by investors ahead of the Q4 earnings dragged the benchmarks lower for the second straight day on Wednesday. A weak trend in the global markets amid hawkish signals from the US Federal Reserve and the upcoming monetary policy meet of the Reserve Bank of India (RBI) also made investors cautious on Wednesday.
The HDFC twins contributed 356 points to the Sensex’s fall on Wednesday, while Infosys and TCS contributed another 106 and 53 points, respectively. While the Sensex fell 566.09 points or 0.94% to close at 59,610.41, the broader Nifty50 declined 149.75 points or 0.83% to 17,807.65. Broader markets, however, remained upbeat in day’s trade. Both BSE mid-cap and small-cap indices have gained up to 7.4% in the last seven trading sessions against the Sensex’s gain of 3.5%. Foreign portfolio investors sold Indian shares worth $301 million on Wednesday, against domestic institutional investors’ purchase of $82 million, provisional data from exchanges showed.
“Traders rushed to trim their position further in banking and IT stocks, thus pulling down key benchmark indices sharply lower. Weakness in other global markets and concerns of hawkish US Fed likely to hike interest rates along with caution ahead of RBI’s policy meet prompted investors to turn risk averse,” said Shrikant Chouhan, head of equity research (retail), Kotak Securities.
The yield on 10-year US bond inched higher on Wednesday after a US Federal Reserve official said the central bank will reduce its balance sheet quickly and further continue to increase interest rates at a steady pace. The US benchmark bond rose 9 basis points (bps) to 2.63% on Wednesday. “Hawkish comments from the Fed vice- chair last night triggered a sharp upmove in US bond yields and the US Dollar Index. This pushed USDINR higher. Over the near term USDINR is expected to trade within a range of 75.45 and 76.20 on spot,” said Anindya Banerjee, VP, currency derivatives & interest rate derivatives at Kotak Securities.
Sector-wise, barring Nifty Pharma and Energy, all other sectors ended in the red — with Nifty Bank and IT being the worst performers. The overall market breadth, however, supported the bulls, as out of the 3,512 stocks traded on the BSE, 2,142 stocks ended in the green on Wednesday whereas 1,277 scrips declined.