Benchmark indices saw correction for the fifth straight session on Thursday, the derivatives expiry day, ahead of Union Budget 2021. In line with weak global equities, Sensex ended 535 points lower at 46,874 and Nifty fell 149 points to 13,817.
Yesterday, Sensex ended 937 points lower at 47,409 and Nifty fell 271 points to 13,967.
HUL, Maruti, HDFC Bank, PowerGrid, IndusInd Bank, HCL Tech and Bajaj Finserv were among the top losers. On the other hand, Axis Bank, SBI, ONGC and ICICI Bank were among the gainers.
Traders said volatility is expected ahead of the derivatives expiry day and ahead of Union Budget 2021-2022 that will be presented on February 1. The reversal of FII from buyers to sellers in the last two sessions, right ahead of the budget also added to the nervousness in Wednesday's trade.
All major sector-based indices except for private banking index closed in red today, with almost 2% fall in realty and IT stocks, followed by1% drop in PSU Banking and auto index. Market breadth was negative with midcap and small-caps ending weak. Meanwhile, the volatility index NSE VIX fell 0.42% today.
Year-to-date Sensex has fallen 1.84% or 876 points and Nifty has erased 1.17% or 164 points, respectively.
Overseas, Asian bourses like Shanghai, Hong Kong, Seoul and Tokyo ended in the red, tracking the overnight plunge seen in US markets. Stock exchanges in Europe were also trading with significant losses in early deals taking cues from the uncertainty that prevailed in global markets as investors remained focused on COVID-19 vaccination and key earnings.
US stocks suffered their biggest one-day percentage drop in three months on Wednesday, on the back of weak earnings from Boeing. Meanwhile, the US Federal Reserve left its benchmark interest rate anchored near zero following the conclusion of its two-day meeting.
In a similar move, broader indices on the domestic front continued to trade in the negative for the fifth day, on the back of profit-booking by investors at high levels.
Keshav Lahoti-Associate Equity Analyst, Angel Broking said," Ahead of the budget, the market continues to be in correction mode by closing down by 1.1% mainly due to profit-booking by foreign institutional investors and weak global cues. Market fears that the budget could make changes that could impact investor wealth so investors are booking profit. In case the fear doesn't materialise in the budget, we expect then bulls will take charge in the market."
"Global cues were weak: Dow Futures, Nasdaq Futures and FTSE closed down by 0.4%, 1.0% and 1.4% respectively. We expect for the next few days market reaction will depend on the upcoming budget," he added.
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said," Markets, globally, have turned weak following the steady decline in the mother market US. The heightened speculative activity in certain segments in US markets has become an area of concern. Back home, in India, the third day of consecutive selling by FIIs ( Rs 1688) have turned the market mood bearish. The budget uncertainty will keep the bulls in restraint."
Ajit Mishra, VP - Research, Religare Broking said,"Markets may see a breather on Friday after the recent slide but volatility would remain high. Nifty respected the support zone at 13,700 but sustainability above the same is critical for a decisive rebound. Considering the prevailing scenario and upcoming event i.e. Union Budget, we suggest continuing with hedged positions and preferring index majors over others."
Vinod Nair, Head of Research at Geojit Financial Services said, "Market turned cautious after the unidirectional upside of the last 10 months due to ambiguity ahead the budget and profit booking in the global market due to over-enthusiasm. Global risk parameters increased despite the US Fed maintaining its supportive policy, due to high speculation in the equity market and likely drop in fiscal & monetary liquidity, in the future."
On the currency front, Indian rupee rose reversed from six days of straight gains and settled 13 paise lower at 73.05 per dollar, amid heavy selling in the domestic equity market and FII outflows.
Kshitij Purohit, Product Manager, Currency & Commodities at CapitalVia Global Research said," All major currency like Singapore dollar, Japanese Yen, the Australian dollar traded in the loss against the US dollar this morning due to rise is dollar index. Technically, USDINR pair closed negative against the US Dollar and investor looking for US GDP data tonight, USDINR spot is trading above the phycological level of 73.00 preceding 21-day SMA is currently around 73.10, and above this, it may continue bullish momentum will continue for the day. USDINR Feb future will trade in the range of 73.25 - 73.60 levels."