Indian Equities Extend Their Losses; Sensex Slips Below 60,000

Indian benchmark indices ended in red on Thursday as banks slipped from record highs and technology stocks extended their decline, countering all gains made by automakers. Investor sentiment dwindled during the day on the possibility of a 100-basis points rate hike by the US Federal Reserve as the inflation print for August was red hot and beyond expectations.

Meanwhile, rating agency Fitch on Thursday cut India's economic growth forecast for the fiscal to 7 per cent from 7.8 per cent. The downgrade follows several banks and rating agencies cutting their growth forecast for the Indian economy after a lower-than-expected first-quarter GDP print. These agencies see growth getting affected due to global economic stress, elevated inflation, and tight monetary policy.

The market also considered India's merchandise trade deficit in August, which widened to USD 27.98 billion from USD 11.71 billion a year earlier.

At close, the Sensex ended 412.96 points or 0.68 per cent lower to settle at 59,934 while its broader peer the Nifty50 shed 126.40 points or 0.70 per cent to settle at 17,877.

“We saw markets rallying sharply over the past week, so profit-taking was on expected lines. Volatility would continue due to concerns of a hawkish stance on rate hikes from the central banks amid rising inflation. In an uncertain market, stock & sector-specific buying activity could gain momentum,” said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.

Sectoral wise, the Nifty IT index was the top loser with Infosys and Tech Mahindra losing 3 per cent each. Auto stock surged with Maruti Suzuki surging 3.2 per cent. Eicher Motors rallied 2.7 per cent to join the Rs 1 trillion market cap club. Pharma and realty sectors took a beating too, losing over a per cent.

"Nifty has formed a bearish candle on daily charts and a double top formation on intraday charts indicating continuation of weakness in the near future. The trading set up suggests that a fresh round of selling is possible only after the dismissal of 17,800 support level. If the index trades above 17,800 then it could retest the level of 18,100 - 18,150. On the flip side, below 17,800, a quick intraday correction is not ruled out. Below which, it could slip till 17,700-17,650," said Chouhan.

Overall, the market breadth favoured bears with about 1,796 shares declining, 1,698 stocks gaining and 126 remaining unchanged.