Markets end in red as selloffs in metal, IT stocks weigh; FIIs continue to offload equities
3 min read . Updated: 06 Feb 2023, 06:12 PM IST
Premium- Apart from Adani rout, foreign funds outflow, and Q3 earnings, investors focus has also shifted towards RBI's monetary policy where a much smaller rate hike of 25 bps has been factored in.
Indian markets kicked started the week on a bearish tone on Monday as a strong job report in the US led to feeble global markets over fears of rate hikes from the Fed. Meanwhile, overwrought continued in the majority of Adani shares as troubled days for the conglomerate deepened. Also, foreign institutional investors (FIIs) continue to offload equities. Apart from Adani rout, foreign funds outflow, and Q3 earnings, investors focus has also shifted towards RBI's monetary policy where a much smaller rate hike of 25 bps has been factored in.
Sensex shed 334.98 points or 0.55% to end at 60,506.90. Nifty 50 dropped by 89.45 points or 0.5% to close at 17,764.60.
Metal stocks faced massive beating followed by substantial selloffs in banking and IT stocks.
On BSE, the Metal index declined by 425 points, while the IT and BANKEX index slipped by 204 points and 206 points.
In the broader market, the Midcap and Smallcap index on BSE rose by 0.75% and 0.49%.
Stocks like IndusInd Bank, Bajaj Finance, Power Grid, and ITC were top gainers of Sensex. While Tata Steel, Kotak Bank, Infosys, and ICICI Bank were top bears.
Majority of Adani Group stocks continued to bleed as the feud between the group and US-based research firm Hindenburg deepened. Adani Enterprises stock dropped by nearly a percent. Adani Power and Adani Wilmar, Adani Green Energy, and Adani Total Gas extended their 5% lower circuits. While Adani Transmission ended at 10% lower circuits. However, Adani Ports witnessed strong buying as the stock rose by 9.5% after double-digit growth in cargo volumes in January month.
Meanwhile, FIIs stayed as net sellers in Indian equities. Cumulatively, these investors pulled out ₹1,218.14 crore on Monday, while domestic institutional investors (DIIs) bought ₹1,203.09 crore.
At the interbank forex market, the rupee traced its biggest single-day decline in over four months. The local unit dropped by around 1% to end at 82.7250 against the US currency --- which is the highest fall since September 22 in percentage terms. The better-than-expected US job report has escalated worries of more rate hikes from the Federal Reserve in the upcoming policies.
Talking about market performance, Vinod Nair, Head of Research at Geojit Financial Services said, "a strong job market in the United States pushed the global market lower on rate hike fears, as it offers the Fed more leeway in enacting stricter policy measures. This was in contrast to the recent rally in the global indices on the expectation that the economy is in its last phase of policy tightening."
Going ahead, Manish Chowdhury, Head of Research at Stoxbox said, "as far as intraday technical analysis is concerned, after forming a bull candle on Friday, the index tried to break its upper trend line but was unable to break and formed a bearish harami pattern. If the market closes above its trend line, it will go higher."
Ajit Mishra, VP - of Technical Research, at Religare Broking believes the recent price action on the benchmark front indicates uncertainty among the participants and that might continue in the near term. Traders should thus maintain their focus more on identifying opportunities in the sectors that are showing resilience. However, it’s easier said than done as we’re seeing restricted participation. Also, managing overnight risk is equally important citing the prevailing volatile scenario.
For Tuesday, Chowdhury said, "since the market forms bearish harami on a daily chart near upper trend line support, traders can look for a short opportunity for intraday if the 1st 15 min candle is negative & if the market opens a gap, then wait for one hour until it sustains above the trend line for a long opportunity."
On the central bank's upcoming policy, Nair said, RBI’s policy announcement on Wednesday will provide more colour on its future rate actions, which is expected to hike rate by 25bps.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
