The domestic equity markets fell for the second consecutive day, led by sharp declines in banking stocks amid concerns over the health of the economy, which has seen little activity in nearly two months.
However, from the day’s high, the index plunged nearly 800 points, or 2.5 per cent, because of the sell-off in banking stocks, such as HDFC Bank, ICICI Bank, and State Bank of India.
The Sensex ended at 31,453, down 262 points, or 0.83 per cent; the Nifty50 fell 0.95 per cent, or 88 points, to close at 9,206. Most global markets gained after oil prices climbed for a fifth day and economies moved towards easing of lockdowns.
After gaining 14 per cent in April, the benchmark indices have declined 7 per cent in the two trading sessions of May.
"The markets are uncertain with regards to the impact of lockdown measures on earnings. Investors are advised to trade cautiously,” said Vinod Nair, head of research, Geojit Financial Services.
On a technical basis, the market trend looks weak, said experts.
“With the Nifty extending losses, bears remain in control. Further downside is likely towards 8,909, once the immediate support of 9,191 is broken. Any pullback rallies could find resistance at 9,396,” said Deepak Jasani, head retail research, HDFC Securities.
Among the Sensex components, SBI fell the most —4.6 per cent — followed by Bajaj Finance and Asian Paints, which declined more than 3.4 per cent each.
HDFC and HDFC Bank declined over 1 per cent each and dragged the index down by 100 points. Reliance Industries, which rose 1.8 per cent, made a 77-point positive contribution.
Both foreign and domestic institutional investors remained net-sellers for the second day in a row.
On Tuesday, they sold shares worth around Rs 1,000 crore each.
A day earlier, they had sold shares worth nearly Rs 1,500 crore.
In the previous session, the Sensex and Nifty had declined nearly 6 per cent each amid rising tensions between the US and China and the extension of stay-at-home orders by another two weeks.
Many major economies have begun the process of easing lockdown restrictions. Experts said the markets, which restore economic activity quicker, may outperform going ahead.