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Indian markets on Thursday came off sharply in the last hour of trade amid expiry of the July series derivatives contracts, with the benchmark indices ending flat, down nearly a per cent from the day’s high. The BSE Sensex, which ended at 32,383.3 points, had climbed to a new record high of 32,673 during the day. The NSE Nifty, too, scaled an all-time high of 10,115 before finally settling at 10,020.5.
Political developments in Bihar, coupled with a stream of positive cues from upbeat corporate results, and the US Federal Reserve’s decision to keep rates unchanged bolstered investors’ sentiment.
The Sensex fell 289 points from the day’s high and the Nifty dropped 94 points, led by declines in IT majors Tata Consultancy Services and Infosys, which fell more than two per cent each. Index heavyweights ITC and Reliance Industries fell around 1.5 per cent each. On the other hand, mortgage major HDFC gained 5.8 per cent and HDFC Bank was up 2.2 per cent.
Unwinding of outstanding derivative positions by participatory notes (p-notes) holders led to huge volatility in the market, experts said. A lot of trading activity was seen in IT, pharma and financial stocks. This followed the Securities and Exchange Board of India’s ban on p-notes from taking unhedged derivative in the futures and options (F&O) segment.
“Markets ended almost flat on the F&O expiry day, amid volatility. In the first half, buoyancy in the financial pack pushed the index higher but profit-taking eliminated all gains by the end,” said Jayant Manglik, president (retail distribution) at Religare Securities.
The market turnover on Thursday was the highest-ever in both the derivatives and cash segments on the NSE; F&O volumes stood at Rs 14.5 lakh crore over the previous-best of Rs 13.7 lakh crore last month, while the cash turnover was Rs 40,100 crore. According to market players, some overseas investors took huge positions in the cash segment. They bought shares worth Rs 1,870 crore in the cash segment, while domestic investors were net sellers to the tune of Rs 660 crore, provisional data by the bourses showed.
The Indian markets have rallied nearly six per cent so far in July on the back of robust inflows from foreign investors and mutual funds. On a year-to-date basis, India is one of the best-performing major markets globally, having risen 22 per cent.