Sensex drops 300 pts, Nifty near 17,750 amid weak global signals; Banks, IT Drag

Major benchmarks started falling on Thursday. As of 09:16 IST, the Sensex was down 300.99 points or 0.50% at 59309.42, and the Nifty was down 73.70 points or 0.41% at 17734. Around 1565 stocks were up, 548 shares fell and 84 shares were unchanged.

The HDFC twins, Maruti, Titan, Wipro, Reliance, TCS, Kotak Bank and Infosys were Sensex’s biggest losers. Dr Reddy’s, Asian Paints, Sun Pharma and Tata Steel, meanwhile, were the main winners.

On the other hand, Dr Reddy’s, Asian Paints, Sun Pharma, Tata Steel, Cipla and Divis Labs, HUL, NTPC and Ultratech Cement, meanwhile, were the main winners. In broader markets, the BSE MidCap and SmallCap indices were in positive territory, up 0.5% higher.

Sector-wise, Nifty Financials, IT, Banks and Auto lagged the most, while Nifty Realty, Pharma and FMCG pack were significantly higher.

Among stocks, state-owned telecommunications company MTNL rose 4%. The government postponed the merger of BSNL and MTNL for financial reasons.

On another side, IDFC Ltd fell 7%. The consortium led by Bandhan Financial Holding will acquire IDFC Asset Management Company and IDFC AMC Trustee Company for Rs 4,500 crore from the company.

Markets could continue their losing streak following weak global signals after hawkish FOMC minutes indicated the US Federal Reserve would likely reduce its massive bond holdings at a maximum rate of $95 billion per month. The FOMC is expected to approve the balance sheet reduction at its next meeting on May 3-4.

Back home, the yield on 10-year government bonds also climbed to nearly 7% ahead of the Reserve Bank of India’s (RBI) monetary policy review scheduled for Friday, on fears the central bank could raise inflation forecasts.

Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said: “Markets, globally, have once again become choppy with a sharp rise in volatility indices. The market’s recent weakness is partly due to increasingly hawkish comments from the Fed. The market now expects the Fed to hike rates by 50 basis points at its next meeting and by around 200 basis points for 2022. This, combined with the Fed’s expected balance sheet reduction, will be a headwind for global stock markets. The ability of markets to remain resilient, even amid this strong headwind, hinges on the Fed’s ability to manage a “soft landing” for the US economy, preventing it from sliding into recession. A significant recent trend in the Indian market is that mid caps are outperforming large caps by around 3% so far this month. This trend is expected to continue.”

Global indices

Wall Street’s major indexes fell on Wednesday with steep declines in tech and other growth stocks, after minutes from the Federal Reserve’s March meeting sharpened investors’ attention to the central bank’s plans. US to fight inflation. Dow Jones fell 0.42% to 34,496.51. The S&P500 index fell 0.97% to 4,481.15. The Nasdaq Composite Index plunged 2.22% to 13,888.82.

On the other hand, oil prices fell sharply as nations pledged to release oil from reserves to counter tight supply and hawkish Fed minutes. Brent oil and WTI crude futures fell more than 5.5% each to $101.07 and $96.23 a barrel, respectively.

On Thursday, Asian markets were largely in the red. Japan’s Nikkei was the big loser, down 1.8%. Hang Seng, Kospi, Taiwan and Straits Times were down 0.5-0.9% each.

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