Key reasons why Sensex, Nifty fell for 7th straight day
Negative global cues had a domino effect on Indian stock market.
BSE Sensex ended 230.22 points or 0.61 per cent lower at 37,558.91. NSE shed 57.65 points, 0.51 per cent and closed at 11,301.80
Bearish global cues had a domino effect on Indian stock market. US President Donald Trump has threatened to impose additional tariffs on Chinese goods beginning Friday, while Beijing said it would retaliate if tariffs rise. Asian stocks tanked, dragging Europe lower.
How the market performed
On the 30-pack Sensex, 13 stocks ended in the green, while 17 stocks traded in the red.
YES Bank was the top performer up 6.44 per cent. Other gainers included Bajaj Finance, TCS, Hero MotoCorp, and HUL.
Reliance Industries was the biggest loser down 3.50 per cent after global brokerage Morgan Stanley downgraded the stock. After two years of outperformance, Morgan Stanley downgraded the stock from ‘overweight’ to ‘equal-weight’ with a price target of Rs 1,349.
Other losers from the Sensex pack included, Asian Paints, Coal India, NTPC, Kotak Bank and Bharti Airtel.
In Nifty50 pack, 23 stocks advanced, while 27 fell.
Broader market suffered too, as BSE Midcap and Smallcap indices fell 0.19 per cent and 0.38 per cent, respectively.
On the sectoral front, FMCG, IT, Consumer Durables, Realty, and Teck were the only gainers. BSE energy was the biggest loser, down 2.63 per cent led by Reliance.
Factors at play
Weak global cues
Asian markets again fell as US-China trade tiff continued to affect investor sentiment. Major Asian markets including Shanghai, Hong Kong, and Nikkei declined up to 2.40 per cent. The Nikkei share average dropped 0.93 percent to 21,402.13, its lowest finish since March 29.
European shares tumbled too amid week cues. The pan-European STOXX 600 index had dropped 0.7 per cent by 0720 GMT, touching a fresh four-week low. China stocks closed at a 11-week low as trade tensions rise. The blue-chip CSI300 index fell 1.9 percent, to 3,599.70, while the Shanghai Composite Index declined 1.5 percent to 2,850.95, Reuters reported.
Heavy selloff in RIL
Oil-to-telecom major Reliance Industries wiped off more than 125 points in Sensex after global brokerage firm Morgan Stanley downgraded the behemoth. The scrip ended 3.41 per cent down at Rs 1,255.15. Selling in HDFC twins, ITC, Larsen & Toubro, NTPC, Asian Paints and Bharti Airtel too weighed market sentiment.
Investors also remained cautious ahead of election outcome on May 23. Market participants were also seen sitting on the sidelines and limiting their exposure ahead of the general election outcome on May 23.
The local currency declined around 23 paise to below the 70 mark to 69.9425 against the US dollar in the afternoon trade amid heavy sell-off in the domestic equity market and foreign fund outflows.
Domestic market is in a consolidation mode as the pre-election rally is fading. Investors have turned cautious as domestic valuations are not so comforting given weak results leading to downgrade in earnings. This negative trend may get extended given slowdown in institutional flows and premium valuation. On global front, escalation in trade tensions between US-China ahead of the upcoming meeting further accentuated the consolidation
- Vinod Nair, Head of Research, Geojit Financial Services