Benchmarks slip for third straight day; Sensex, Nifty drop over 1%

RIL, HDFC Bank a major drag

Indian equity benchmarks declined on Tuesday amid the biggest one day  selling by foreign portfolio investors (FPI) in three months. The Sensex ended the session at 81,186, a decline of 873 points or 1.06 per cent, while the Nifty closed the day at 24,684, a drop of 261 points or 1.05 per cent. The total market capitalisation of BSE-listed firms declined by ₹5.6 trillion and stood at ₹438 trillion. 

 

FPIs on Tuesday were net sellers to the tune of Rs 10,016 crore, their biggest selling since February 28, while domestic institutions bought shares worth Rs 6,738 crore.

 

Most of the Sensex decline was contributed by HDFC Bank, which fell 1.3 per cent where FPIs hold significant stake  followed by Reliance Industries, which dropped 1.1 per cent. Finance stocks remained under selling pressure, and Nifty Financial Services, a gauge tracking finance stocks, fell by 1.2 per cent. All the Nifty sectoral indices declined, with Nifty Auto falling 2.2 per cent, the most. 

 

 

Indian equities have been ending with losses this week after closing last week with a 4.2 per cent rise, marking their best weekly run since April 18. Last week, equity markets rose following a ceasefire understanding between India and Pakistan. However, there was some profit-booking after the US and China agreed to slash reciprocal trade tariffs for 90 days.

 

Buying returned later in the week after US President Donald Trump said India had offered to drop tariffs on US goods. Lack of positive triggers has been dragging markets this week. 

 

"With a lack of major positive triggers and prevailing uncertainty over US fiscal stability, investors opted for profit-booking and adopted a cautious stance. Selling pressure was widespread as participants awaited more clarity on the India-US trade agreement. Given the current premium valuations and delays in the trade deal, we foresee a phase of short-term consolidation, which may lead foreign institutional investors (FIIs) to scale back their positions in the domestic market," said Vinod Nair, head of research of Geojit Financial Services.

 

Going forward, the trajectory of Indo-US trade talks, the remainder of the earnings season and the monsoons will determine the market behaviour. 

 

"The decline reflects rising caution among market participants without any major domestic triggers and amid global uncertainties. Intermediate volatility in the US markets and concerns over the potential impact of the US-China trade deal on foreign institutional inflows into emerging markets, including India, also weighed on sentiment," said Ajit Mishra, SVP-research of Religare Broking.

Mishra added that investors should not overreact to the recent dip and instead wait for clearer signals. 

"While the breach of the 24,800 mark in Nifty has dampened near-term momentum, the short-term trend remains positive as long as the index holds above the 24,400 level decisively," he said.

 

The market breadth was weak with 2,642 stocks declining and 1,341 advancing.