FII buying has been a mainstay of the current rally pushing it to record highs. However, selling in the market is now on expected lines, as analysts had predicted some consolidation.
“We had two consecutive days of FII selling in the market. It appears that the market is a bit apprehensive of some Budget tax proposals which may not be market-friendly. We don’t know. So it makes sense to wait for the Budget and then take a call on investment strategy. L&T’s results, particularly the order book, bodes well not only for the company but also for the economy,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Factors driving markets
- Q3 earnings: A sense of caution has also seeped into the minds of investors after some companies reported lower than expected numbers. A higher level of bad loans for banks has also spooked investors.
- FII selling: It seems the foreign institutional investors have turned bearish on Indian equity markets and have started to book profits. DIIs also continue to sell stocks.
- Fed meeting outcome: The us central bank will announce the verdict of its two-day policy meeting on Wednesday, and it is expected to stand pat on policy.
- Stimulus coming soon: Democrats in the US Senate will move forward on US President Joe Biden’s $1.9-trillion coronavirus relief plan without Republican support, if necessary, Senate Democratic leader Chuck Schumer said on Tuesday.
- IMF raises forecast: The International Monetary Fund on Tuesday raised its forecast for global economic growth in 2021
How bluechips are doing
After opening in the red, benchmark indices drifted lower, amid a selloff across financial stocks, especially private sector banks. BSE flagship Sensex ended 937.66 points or 1.94 per cent lower at 47,409.93, and NSE benchmark Nifty followed, closing 271.40 points or 1.91 per cent lower at 13,967.50 — both indices gave up their entire gains on a year-to-date basis.
Investors lost Rs 2.62 lakh crore in Wednesday’s session, as the market capitalisation of BSE-listed companies tumbled.
“14,250 was a medium-term support for the index which was pierced on Monday. This makes the Nifty vulnerable and we can go down to 13,950 as a possible target. If we are unable to hold that level, we could fall further to 13,600. On the upside, the resistance is at 14,550-14,600 and until we do not close above that zone, we will continue to remain in the grip of the bears,” Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments.
In the 50-share pack Nifty, Wipro was the biggest gainer, up 2.79 per cent. ITC, Tech Mahindra, M&M, UltraTech Cement, L&T, SBI Life Insurance and HCL Tech were among other gainers.
Hindalco was the top loser in the pack, down 3.77 per cent. Eicher Motors, Tata Motors, Indian Oil, Tata Steel, Reliance Industries, HUL and JSW Steel were other losers in the pack.
Broader markets
The broader market indices traded with cuts, in line with their headline peers, in morning trade. Nifty Smallcap dropped 0.60 per cent while Nifty Midcap slipped 1.13 per cent. The broadest index on NSE — the Nifty 500 — was down 0.81 per cent.
L&T Tech Services, Dr Lal Pathlabs, Varun Beverages, Tata Elxsi, Granules India and Amber Enterprises were among major gainers from the space, while CanFin Homes, Trident, DCM Shriram, Future Retail, Shriram Transport Finance and Ashok Leyland were under selling pressure.
Global markets
MSCI’s gauge of Asian ex-Japan shares slipped 0.3 per cent, due to profit-taking in resource shares as some investors have grown wary of stretched valuations.
But Japan’s Nikkei rose 0.2 per cent and the region’s tech-heavy markets, such as South Korea and Taiwan, eked out small gains, helped by a 0.5 per cent rise in Nasdaq futures after Microsoft’s brisk quarterly results.
S&P 500 futures were mostly flat, capped by caution ahead of the Fed’s policy meeting as well as profit-taking on cyclical shares after stellar gains this month.
