Bear attack at D-St: Sensex nosedives 1,000 pts from day's high; key factors spooking the markets

Domestic equity market took a sharp U-turn during the trading session on Tuesday as headline indices gave up early gains and dropped sharply. Street participants continue to weigh in both global and domestic factors including the union budget and the US Fed's policy outcome. BSE Sensex tumbled more than 1,030 points from day's high to slip to 71,107.77 but finally settled at 71,139.90, falling 801.67 points or 1.11 per cent for the day. Nifty50 index lost over 300 points during the session to barely hold above 21,500-levels. The NSE's barometer lost 215.50 points or 0.99 per cent to end the session at 21,522.10.

Benchmark Indian indices moved into the red during the session today. Investors appear cautious considering the slew of near-term triggers coming up including India's interim budget on Thursday and Fed policy decision on Wednesday, said  Avdhut Bagkar Technical and Derivatives Analyst, StoxBox.

However, broader markets outperformed the headline indices as the BSE midcap index was down about half a per cent, while the BSE smallcap index was settled in green for the day. Fear gauge India VIX spiked another 3.65 per cent to 16.25-levels on Tuesday.

Investors added a notional wealth of more than Rs 7.03 lakh crore for the day as the total market capitalization of all BSE-listed companies plunged down to Rs 375.37 lakh crore on Monday, compared with a total valuation of Rs 382.40 lakh crore recorded in the previous trading session on Monday. Here are the key factors that weighed on the market sentiments on Tuesday:The US Fed's policy The US Federal Reserve will announce its monetary policy on Wednesday. Traders awaited the Federal Reserve's monetary policy decision this week for clues on when the US central bank might cut rates. Data on job openings from the US Department of Labor Statistics due later on Tuesday will offer a prelude to the closely watched payroll report to be released on Friday.Profit booking in Reliance Shares of Reliance Industries saw a sharp bout of profit-booking on Tuesday after the company surged about 7 per cent during the previous trading session. The stock dropped about 2.7 per cent to settled at 2,818 after hitting a 52-week high at Rs 2,917.95 early in the session.Evergrande crisis Asian stocks stumbled on Tuesday as the court-ordered liquidation of property giant China Evergrande weighed on sentiment while geopolitical tensions lifted oil prices and dented risk appetite. Uncertainty around how the court order to liquidate Evergrande Group will play out and its impact on the nation's fragile property market is keeping investors on edge.

The trend weakened in EMs as liquidation order for a major Chinese real estate firm dampened the sentiment. The US Fed is anticipated to maintain a rate pause, close attention will be paid to any hints regarding a potential rate cut in the month of May, said Vinod Nair, Head of Research, Geojit Financial Services.Selling pressure in bluechips Other blue-chips including ITC and Bajaj twins dropped sharply during the trading session on Tuesday. Bajaj Finance dropped close to 5 per cent after margin hit, while Bajaj Finserv tumbled 3 per cent ahead of its Q3 earnings. ITC also declined close to 3 per cent before budget and dull Q3 performance.Budget Expectations Traders keenly awaited the interim union budget due later this week. The central government will table the interim budget, which will merely be a vote on account, on Thursday, February 1, 2023. However, the market is anticipating some populist measures to push economic activity and boost consumption in the budget year. In the near-term, expectations regarding the budget will influence the market. Market doesn’t expect any major changes in taxation relating to the capital market. Therefore, any such proposal will have an impact on the market, said  VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

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