Markets fall for third day amid sell-off in RIL; Sensex falls 500 points

The Indian markets fell for a third day on Monday amid sell-off in index heavyweight Reliance Industries (RIL) even as most global markets posted gains on optimism around fresh stimulus in the US. Market players said worries that the government might increase taxes on stock market transaction in the Union Budget also weighed on the sentiment.

After swinging nearly 1,000 points, the BSE benchmark settled with a loss of 530.95 points or 1.09 per cent at 48,347.59. The broader Nifty fell 133 points or 0.93 per cent to end the session at 14,238.9. Shares of RIL fell nearly 6 per cent and accounted for nearly a third of the losses. Investors dumped the shares of the country’s most-valuable company on disclosure concerns even as the company posted record profits.

Over the last three sessions, the BSE Sensex has lost 1,444.53 points or 2.90 per cent and the NSE Nifty has shed 405.80 points or 2.8 per cent.

Foreign portfolio investors sold shares for a second day in a row. On Monday, the dumped stocks worth Rs 765 crore, while domestic investors too sold shares worth Rs  389 crore.

"Domestic equities were quite volatile today and gave up all early hours' gains. Investors continued to prefer in taking profits off the table ahead of union budget and F&O expiry. Barring pharma and select financials, most of key sectoral indices were in pressure today," Binod Modi, Head Strategy at Reliance Securities, said.

Vinod Nair, Head of Research at Geojit Financial Services stated that Indian markets witnessed a highly volatile trade due to weak global market and reports of Indo-China border tension.

"Policy decisions of the US Fed meeting which will commence tomorrow will drive the global market in the coming days. We have seen Indian markets being highly volatile these days and this trend is expected to continue this week as we inch closer to the Union Budget," Nair added.

Of the Sensex constituents, 21 closed in the red and only nine in the green. IndusInd Bank, HCL TECh and Asian Paints were among the other major losers.

Among the gainers were Axis Bank, Sun Pharma, Bajaj Auto, Bajaj FinServ, HDFC Bank and Dr Reddy's.

Analysts are of the view that markets may remain volatile in this holiday-shortened week amid monthly derivatives expiry, quarterly earnings and the upcoming Union Budget.

Among the major sectoral losers were BSE energy (4.44 per cent), oil & gas (2.16 per cent), power (1.41 per cent), industrials (1.32 per cent) and IT (1.31 per cent).

In the broader market, largecap index performed better than the benchmark Sensex, falling 0.90 per cent. On the other hand, midcap and smallcap indices underperformed the benchmark, dropping by 1.14 per cent and 1.15 per cent, respectively.

On the other hand, Grasim was in focus on Monday as it jumped 6.44 per cent after it announced its foray into paints business.

Analysts said that corporate earnings so far have been quite impressive as earnings exceeded analysts' estimates in most of the companies. Further, vaccination drive started well in India, which along with continued improvement in recovery rate offers domestic equities an edge over other markets.

On Nifty, Rohit Singre, Senior Technical Analyst at LKP Securities, said that the index has breached all good support which hints if index managed to sustain below Monday's low then index may hit 14k mark soon which is strong support on the downside, on the higher side now index has good resistance near 14350-14440 zone again that would be profit booking levels for longs.

Indian equity markets will remain closed on Tuesday for the Republic Day.

On the forex front, the rupee ended 3 paise higher at 72.94 against the US dollar. Meanwhile, Brent crude, the global oil benchmark, was trading 0.56 per cent higher at $55.69 per barrel on Monday.