Market indices Sensex and Nifty erased early gains and closed in red territory on Tuesday, tracking fall in their Asian counterparts.
Extending decline for the second straight session, Sensex ended 261 points lower at 31,453 and Nifty fell 87 points to end at 9,205. In terms of sectors, PSU Banking closed 3% lower, followed by 2.8% fall in realty, 2.6% fall in bank and 2.1% decline in private banking and financials. FMCG and pharma closed 1.5% lower each.
Bharti Infratel, ONGC, M&M, BPCL and Zee Entertainment were the top gainers on Nifty, while Asian Paints, Bajaj Finance, Britannia, Dr Reddy's and Cipla were among the losers on Nifty.
Led by firm global cues, markets opened higher on Tuesday as reopening of various economies in a phased manner boosted risk appetite. However, indices turned bearish by afternoon session.
Experts said market sentiments turned cautious amid mixed signals on growth and hopes on a possible vaccine, progress on policy support and a fresh threat of US-China tariff escalation in the backdrop of virus.
Ajit Mishra, VP - Research, Religare Broking said, "We feel muted earnings combined with looming uncertainty over the economic situation due to extended lockdown have started haunting the participants."
Traders said investors were also cautious ahead of March quarterly earnings. Adani Ports, Astec Lifesciences, Rallis India, NIIT Technologies, Tata Coffee, SBI Life will be reporting their Q4 figures today. Besides this, YES Bank, Adani Enterprises, JM Financial, Kansai Nerolac Paints, TCI Developers, DG Content will be reporting their quarterly results tomorrow.
Sugandha Sachdeva VP-Metals, Energy & Currency Research, Religare Broking said, "Sentiments have also taken a beating amid weak PMI manufacturing numbers, underscoring the impact of coronavirus on the economy, where the overall trend in rupee looks skewed on the downside. The IIP numbers ahead are expected to be weak and going to worsen the rupee-dollar equation."
Ratings firm S&P said India's fiscal space is expected to be limited, owing to the government's already elevated deficit. Systemic pressures for Indian banks could rise, owing to the extension of the virus-induced lockdown, added S&P.
Meanwhile, rupee ended higher at 75.62 per dollar as against Monday's close of 75.71 against the US dollar
Expressing views on Nifty's near-term outlook, Sameet Chavan ,Chief Analyst-Technical and Derivatives, Angel Broking said, "Now, with today's move, bears have put up a sturdy wall around 9400-9450. Before this, the intraday resistance can be seen at 9300-9350. On the downside, we have now reached a crucial support zone at 9200. A follow-through selling below this would extend the correction back to 9100-9000."
With markets continuing the general bear trend, most brokerages have recommended limited exposure in financials and infrastructure and higher weightage on pharma and agrochemical sectors.