Benchmark Sensex and Nifty declined close to a per cent on Tuesday amid a sharp correction in top-weight HDFC Bank after a less-than-expected increase in its weight in the MSCI Global Standard Index.
The NSE Nifty 50 index shed 0.85 per cent to close at 24,139, while the S&P BSE Sensex lost 0.87 per cent to end at 78,956. The two indices are now down almost 4 per cent from their respective all-time highs registered at the start of the month.
The markets also witnessed broad-based selling, with over two stocks declining for every one advancing on the BSE.
Experts attributed the weakness to a host of factors, from weak global sentiment to lacklustre index of industrial production (IIP) data.
“The domestic market plunged into red terrain in the latter half, amidst mixed global sentiment. Recent IIP data indicates lacklustre growth in the major manufacturing sector. Persistent selling by overseas funds and elevated valuations are further contributing to the decline,” said Vinod Nair, head of research, Geojit Financial Services.
Foreign investors sold shares worth Rs 2,107 crore, taking their month-to-date selling tally close to Rs 20,000 crore.
Both domestic and global markets have been through a turbulent period over the past week following weak US unemployment data, which stoked fears of recession.
A report by DBS Bank has highlighted that the ‘equities risk score’—which is linked to the volatility index—has experienced the most substantial spike this month, rising to the highest level since March 2023 following the collapse of Silicon Valley Bank.
“The risk score could have further upside as uncertainties around the US election, market valuations, and Fed policy direction keep the market sensitive,” DBS said in a note.
The India VIX index rose 1.9 per cent to 16.2 compared to 13.73 a month ago.
Among sectoral indices, the Nifty Financial Services index fell the most, at 1.9 per cent. All other sectoral indices also closed in the red, except for Nifty Consumer Durables, which gained 1.3 per cent, and the Nifty IT and Nifty Healthcare indices, which ended flat.
Amid the broad-based sell-off, the major stocks that bucked the trend included Titan Company, Apollo Hospitals, Dr Reddy’s Laboratories, and Nestle India.
The Nifty Midcap 100 and Smallcap 100 indices fell 0.78 per cent and 1.3 per cent, respectively.
According to technical analysts, there is a possibility of a downside breakout if weakness persists.
“A long negative candle was formed on the daily chart that has moved below the immediate support of the ascending trend line at 24,300 levels for the Nifty. Technically, this pattern indicates a possibility of downside breakout of the range movement. A sharp follow-through weakness could confirm the downside breakout,” said Nagaraj Shetti, senior technical research analyst at HDFC Securities.
First Published: Aug 13 2024 | 7:29 PM IST
