BSE benchmark S&P Sensex tanked over 1,000 points in the opening session on Friday tracking losses in index majors ICICI Bank, HDFC and Reliance Industries amid a negative trend in global markets.
After touching a low of 49,950.75, the 30-share BSE index was trading 927.21 points or 1.82 per cent lower at 50,112.10. The broader NSE Nifty was quoting 270.40 points or 1.79 per cent down at 14,826.95.
IndusInd Bank was the top loser in the Sensex pack, shedding around 3 per cent, followed by ICICI Bank, Axis Bank, HDFC, M&M, SBI, HDFC Bank, Reliance Industries and Tech Mahindra.
Nestle India, Maruti, HUL and Bharti Airtel were among the gainers.
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“We are now in a see-sawing market moving up and down in response to positive and negative news. But the long-term texture of the market has been ‘buy on dips’ and this strategy has been rewarding in this bull run. The sell-off in the US market yesterday was the market’s response to 10-year yield touching 1.6 per cent,” says VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
The Federal Reserve’s interpretation of the rising yield is that it is discounting better growth prospects while the market typically discounts stock prices at a lower price-to-earning ratio (PE) when interest rates rise. “Fed’s declared commitment to inject liquidity and keep rates low through 2023 can ensure a buoyant market this year. So investors can utilise opportunities thrown up by corrections to buy quality stocks is performing sectors,” Vijayakumar says.
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In the previous session, Sensex closed 257.62 points or 0.51 per cent up at 51,039.31, and Nifty climbed 115.35 points or 0.77 per cent to 15,097.35. Foreign Institutional Investors (FIIs) were net buyers in the capital market as they purchased shares worth Rs 188.08 crore on Thursday.
“Recent rise in bond yields globally and concerns with regard to higher commodity prices weighed on investors’ sentiments as these two elements reduce the future value of cash flows and earnings,” says Binod Modi, strategy head at Reliance Securities.
The pullback yesterday after the opening surge and subsequent close below 15,123, suggest that buyers are less keen to chase prices higher, and could be waiting for dips to 14,934, the entry point suggested yesterday. Dips below the same could render the trend vulnerable for falls to 14481, according to a Geojit Financial study.
US equities witnessed a steep fall as sharp spike in bond yields dampened investors’ sentiments. Elsewhere in Asia, bourses in Shanghai, Hong Kong, Seoul and Tokyo were trading with significant losses in mid-session deals.
The global oil benchmark Brent crude was trading 0.62 per cent lower at $65.70 per barrel.
