Sensex falls 286 points, Nifty settles below 19,450; IB Housing, Axis Bank tank up to 7%

Domestic equity markets extended their falls for another trading session and settled lower on Wednesday. Weakness in the global equity markets weighed on the market sentiments ahead of RBI's monetary policy. Persistent FII selling, rise in the US bond yields and volatile dollar is denting the buying mood at Dalal Street.

For the day, BSE's barometer Sensex tanked 286.06 points, or 0.44 per cent, to settle at 65,226.04. NSE's Nifty50 tanked 92.65 points, or 0.47 per cent, to end at 19,436.10. Broader markets underperformed the headline indices as the BSE midcap index shed about 2 per cent, while the smallcap index settled a per cent lower. Fear gauge India VIX dropped about 2 per cent to 11.60-level.

Overseas investors are pulling out funds from Indian equity markets as the current rally in US dollar and bond yields is making emerging market assets less attractive. Despite our strong macroeconomic growth performance, India is not insulated from global problems, and any correction in global markets would have a rub-off effect, said Shrikant Chouhan, Head of Research (Retail) at Kotak Securities.

"The Nifty has formed a Dragonfly Doji candlestick formation which is indicating a strong possibility of a relief rally from the current levels. For day traders, 19,380 would be the key support level to watch out, above which the index could see the pullback rally till 19,500-19,550. On the flip side, below 19,380 the selling pressure is likely to accelerate and could slip till 19,330-19,300," he said.

On a sectoral front, only Nifty IT and FMCG indices managed to settle in green. Among the laggards, the Nifty PSU Bank index dropped about 3 per cent, while the Nifty media, realty and healthcare indices dropped about 2 per cent each. The Nifty pharma, metal and auto indices shed more than a per cent each.

In the Nifty50 pack, Axis Bank crashed about 5 per cent for the day, while the State Bank of India tumbled about 3 per cent for the day. NTPC, IndusInd Bank, Bajaj Auto, UltraTech Cement, Tata Steel, Bajaj Finserv, JSW Steel and Maruti Suzuki declined about 2 per cent each for the day.

Among the gainers, Adani Enterprises and Nestle India gained more than 3 per cent each, while Eicher Motors, Hindustan Unilever and HDFC Bank gained about 2 per cent each. Infosys, Tata Consultancy Services and Britannia Industries gained about a per cent each by the end of the session.

Strong US job data is reinforcing Fed's hawkish stance and multi-year high US bond yields is signalling an impending interest rate hike. Globally, investors are adopting risk-averse strategies due to inflation concerns and the strengthening US dollar. Despite a robust economy, premium valuations of midcaps and recent rally is augmenting consolidation in India, said Vinod Nair, Head of Research at Geojit Financial Services.

"Interest-rate-sensitive sectors like real estate, banking, and metals are the most impacted category, while the FMCG sector is more optimistic in expectation of near-normal monsoon and festival demand. Auto is consolidating amid mixed growth numbers and in this weak period, large-cap are a trading safe to hold on," he said.

A total of 3795 shares were traded on BSE on Wednesday, of which 2,387 settled with cuts. 1,295 stocks ended the session with gains while 113 shares remained unchanged. During the day, 296 shares hit their upper circuit, whereas 206 shares tested the lower circuit levels for the day.

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