NEW DELHI: The domestic equity market reversed gains on Tuesday after surging over 3 per cent in the previous session, as euphoria over exit poll outcomes, which predicted a second-term for the BJP-led NDA government fizzled out.
Bank, IT and auto stocks were at the forefront of the selloff in which benchmark indices came off 1 per cent from their record highs. Both Sensex and Nifty had scaled new record highs in the opening trade.
BSE flagship Sensex plunged 383 points or 0.97 per cent to 38,970. Its NSE counterpart Nifty slipped 119 points or 1.01 per cent to 11,709. India VIX rose 9.23 per cent to 25.86.
The BSE advance-decline ratio stood at 3:5, meaning a rise in every three stocks was followed by a decline in five.
Factors that weighed on Dalal Street:
Profit-booking at higher levels
The rally on Dalal Street paused after the benchmark indices rose too fast and too soon amid enthusiasm over exit poll results. But fear gripped investors as they found themselves in unchartered territory and profit booking ensued.
Technical charts on Monday hinted that some profit booking might take place after the index formed bullish candle on daily charts. “Going ahead, the 11,850-12,000 range will be an area full of resistance. There is a possibility that the index will give up its gains near this key resistance zone and start tumbling again,” said Gaurav Ratnaparkhi of Sharekhan.
Crude oil continues to rise
Oil prices rose on escalating US-Iran tensions and amid expectations that producer club Opec will continue to withhold supply this year. But gains were checked by concerns that a prolonged trade war between Washington and Beijing could lead to a global economic slowdown.
futures, the international benchmark for oil prices, were at $72.18 per barrel. Elevated oil prices are a concern for India as it weighs on the country’s trade deficit.
Market at a glance:
In the 30-pack Sensex, only three stocks ended higher, namely — Bajaj Finance (up 1.12 per cent), Reliance Industries (up 1.09 per cent) and HUL (up 0.84 per cent).
Meanwhile, shares of Tata Motors declined the most. The company’s stock came under pressure following weak March quarter numbers. The automaker reported a 49 per cent decline in consolidated net profit to Rs 1,108.66 crore for the quarter ended March 31. The scrip ended 6.68 per cent lower.
Among off the main board stocks, Jet Airways surged over 14 per cent on reports that Hinduja Group will bid for the debt-beleaguered airline.
The midcap and smallcap indices too declined but fared better than Sensex. The BSE Midcap settled 0.84 per cent lower and BSE Smallcap 0.61 per cent.
Seventeen out of 19 sectors ended in the red. Only Capital Goods and Energy managed to close higher. BSE Auto was the worst hit, declining 2.60 per cent. Telecom, Teck, Metals and Bankex were among sectors that dropped over 1 per cent.
“Market gave up gains after testing a new high as the positive sentiment on exit polls is gradually priced-in. The pre-election rally may continue if the election verdict comes in tandem with exit polls where quality mid & small caps will outperform. Additionally, the downside risk in the market is likely to be protected in the near term supported by extension in economic reforms and pick up in earnings. On the other hand, the global peers are trading in a positive note with signs of ease in trade tensions”
– Vinod Nair, Head of Research, Geojit Financial Services
“Profit booking was seen in banking stocks after yesterday’s sharp surge. Other sectors such as auto, metal, IT and realty also faced selling. Traders can also book profit in tomorrow’s trading session ahead of the general election results”
– Rajnath Yadav, Sr. Research Analyst, Fundamental Research Desk