Benchmark Indices Extend Losses For Third Consecutive Day

Benchmark indices continued their fall for the third consecutive day on Wednesday owing to weaknesses in global markets and some profit booking.

The 30-share pack Sensex declined 237.44 points 0.41 per cent to close at 58,338.93. Its broader peer NSE Nifty also settled below the 17,500 mark.

“In the last three days, the benchmark indices witnessed profit booking at higher level. Nifty ended 309 points or 1.73 percent lower while the Sensex has come down by 1122 points. Due to tepid global market conditions, temporary overbought situation and ahead of long weekend, traders preferred profit booking at higher levels. In last three trading session, the Nifty/ Sensex corrected nearly 350 /1150 points. Among sectors, profit booking was seen in IT, Metal and Reality stocks whereas Energy stocks outperformed, as a result Nifty Energy index rallied over 2.4 percent,” said Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities.

Losses in Wednesday’s session were largely led by auto, banks and financials. Oil and gas stocks rose as global crude oil prices climbed back above $100 a barrel.

India’s retail inflation print for March 2022 also raised alarm bells for investors. Retail inflation for March at 6.95 per cent, breached RBI’s tolerance level of 6 per cent for third consecutive month. Last week, the Reserve Bank of India slightly changed its stance on the monetary policy front. While maintaining an accommodative stance as long as necessary to focusing on withdrawal of accommodation, the RBI has taken the first step towards normalising the monetary policy. The introduction of the Standing Deposit Facility or SDF as a tool in the LAF corridor is a signal to suck out an abundance of liquidity sloshing around in the market.

“Weakness in the markets continued ahead of the long weekend as traders preferred to cover up all open positions. Also, ahead of the earning seasons, most investors preferred to stay on the sidelines. Market participants are likely cautious given sustained high inflation and tightening monetary policy globally. US March inflation stood at a four decade high. In India too, March 2022 CPI inflation surged to 6.95 per cent. Persistence of high commodity prices amid supply-chain disruptions and resurgence in Covid cases globally will likely weigh on the inflation trajectory,” said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.

The Nifty finance index, bank index and auto index were down between 0.75 per cent and 0.87 per cent.

HDFC and HDFC Bank, Bajaj Finserv and automaker Maruti Suzuki were the top percentage losers on the Nifty 50, falling more than 1 per cen each.

“Technically, the make-or-break Nifty’s support is seen at its 200 DMA at the 17,159 mark. Intraday support at 17427 mark. Caution will again be the buzzword. Investors should look only for value investing with a long term perspective,” said Prashanth Tapse, Vice President (Research), Mehta Equities.

Markets will remain closed on Thursday and Friday due to public holidays.