Mumbai: Indian markets fell another 1% on Wednesday tracking losses in global markets as concern about escalating US-China trade tensions weighed on sentiment. Benchmark indices Sensex and Nifty fell for sixth sessions hitting over six-week low.
The benchmark S&P BSE Sensex fell below the 38000-mark for first time since 26 March. At closing, it was down 1.27% to 37,789.13 points, while the NSE Nifty 50 index declined 1.2% to 11,359.45 points. In the last six sessions, the Sensex fell 3.2%, or 1,278 points, while the Nifty was down 3.36%, or 395 points.
Sahaj Agrawal, Head of Derivatives- Kotak Securities said momentum failure at higher levels has had a significant impact on the broader markets. Breach of intermediate supports at 11550/11450 is expected to aggravate short-term selling pressure. On the downside 11000-11100 is expected to be tested before we witness an aggressive recover.
"Investors are advised to use this correction as an opportunity to accumulate while traders should wait for momentum reversal from strong support levels. We strongly believe this is a corrective phase in an up trending market" Agrawal added.
Rajnath Yadav says mixed corporate results, intensified selling by FIIs in large cap stocks and caution ahead of election verdict on 23 May also weighed on the sentiments. For future market movements investor will keep a close eye on development over scheduled Us-China trade talks, Yadav adds.
Global markets remained subdued as the US threat of higher tariffs on Chinese imports reverberates through global markets. Focus has turned to Washington for the visit of China’s top trade negotiator later this week.
"We expect the markets to remain range bound in the near term. Volatility and choppiness is likely to remain high on back of announcement of the key domestic macro data in the coming session and progress of central elections. Meanwhile, investors would continue to focus on Q4FY19 earnings season. On global front, market participants would closely monitor progress of trade talks between US and China, behavior of crude oil prices and fluctuation in currency. We advise investors should continue to focus on quality companies, with strong financials and bright prospects ", said Jayant Manglik, President - Retail Distribution, Religare Broking Ltd.
Analyst believe that the fresh spat between the US and China on trade would dim the prospects for global economic growth. Earlier, Reserve Bank of India in its policy highlighted concerns over India's growth. Asian Development Bank and RBI earlier cut their 2019-20 growth projection for India to 7.2% from 7.4% earlier, blaming rising risks to global economic growth as well as weakening domestic investment activity. IMF’s downward revisions in India’s growth forecasts 20 basis points each in 2019-20 and 2020-21 from its outlook released in January.
"Lackluster prospects for growth. We believe that weak monsoons, sustained high interest rates, weak rural demand and reduced space for government expenditure will continue to weigh on GDP growth prospects. The slowdown in consumer goods has been sharper than we had earlier expected. We maintain our FY19 GDP growth estimate at 6.9% but lower our FY20 estimate to 6.8%. While quick fixes will be the call for the day, the focus should firmly be on structural measures to address the issues" said Kotak Institutional Equities in a 6 May report.
Zee Entertainment Enterprises Ltd fell for firth sessions as speculations are ripe that the stake sale process is undergoing some hindrance. Investors were also concerned about audit of the financial statements of the company for fiscal year 2019. However, the company denied this rumors.
So far this year foreign investors have bought nearly $10 billion in equities while domestic investors have sold ₹16400 crore of the asset class, provisional NSE data showed.
All the sectoral indices closed lower. BSE Energy was the top loser with falling 2.5% followed by BSE Realty and power indices which declined 2.1% and 1.6% respectively.
Bloomberg contributed to this story