D-street Bulls Struggle Against Weak Global Cues, Inflation Woes
Extending losses for the second straight session, domestic benchmark indices settled in the red zone on Wednesday. Hawkish statements from the US Federal Reserve, the prospects of the EU strengthening its resolve to ban fossil fuel exports from Russia after the Bucha incident and losses in global markets shook D-street bulls' confidence.
The 30-share pack Sensex declined 566.09 points or 0.94 per cent to close at 59,610.41. Its broader peer NSE Nifty fell 149 points or 0.83 per cent but managed to close above the 17,800 mark. Banking and IT stock were top drags during the session. However, both benchmarks recovered from day's low as power and metal stocks offset some losses.
"Nifty joined the conga-line of sinking stock markets across globe amidst recession risks that are seen ringing louder. Denting sentiments were the ‘panic-like selling’ leads from overnight Wall Street trade after the Federal Reserve governor Lael Brainard said the central bank will reduce its balance sheet soon. Digging deeper, the bulls’ confidence was knocked again amidst growing investor unease over the concerns over rising bond yields. The yield on the U.S. 10-year Treasury has spiked to 2.61 per cent," said Prashanth Tapse, Vice President (Research), Mehta Equities.
Oil marketing companies in India continued to raise pump prices on the back of elevated global crude prices, sparking worries of an acceleration in inflation.
"Traders rushed to trim their position further in banking and IT stocks, thus pulling down key benchmark indices sharply lower. Weakness in other global markets and concerns of hawkish US Fed likely to hike interest rates along with caution ahead of RBI's policy meet prompted investors to turn risk averse," said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.
The Reserve Bank of India's (RBI) three-day monetary policy meeting begins on Wednesday, while the Fed will release later in the day minutes of its meeting, which investors will scrutinise for clues on rate hikes.
The RBI will delay its first interest rate rise by at least four months to August at the earliest, according to a Reuters poll of economists.
The Nifty Bank index fell 1.14 per cent and the finance index dropped 1.6 per cent, falling for a second straight session after a more than 4 per cent jump on Monday.
"The intraday texture of the market has turned weak and a fresh pullback rally is possible only after 17900 breakout. For traders, 17900 would act as an immediate hurdle, and below the same a weak formation is likely to continue till 17700-17650. However, above 17900 the index could move up to 17820-17865. The Nifty is having a strong support between 17650-17700 and hence contra traders can take a long bet near 17650 with strict support stop loss at 17620," said Chouhan.
Paytm parent One 97 Communications' shares rose 4.6 per cent after the digital payments firm said it should be able to achieve a breakeven for a key metric of profitability in one-and-a-half years.
(With inputs from Reuters)
