Headline equity indices Sensex and Nifty fell for a second straight session on Tuesday, tracking selloffs in global markets as investors fretted over inflation fears and economic uncertainties.
Investors also remained cautious ahead of the release of key macro data like inflation and IIP numbers as these will give an idea about the scale of monetary tightening by central banks.
Starting off on a negative note, the Sensex loss widened as the day’s trade progressed and fell nearly 600 points during the session. It finally settled 509 points or 0.94 percent lower at 53,887.
Likewise, the NSE Nifty slipped about 138 points or 0.85 percent to close at 16,078.
On the Sensex chart, barring NTPC, Bajaj Finance and Bharti Airtel, all shares closed in the red – shedding as much as 2.43 percent. Infosys, HCL Tech, HUL and M&M were top laggards.
Meanwhile, the Reserve Bank of India (RBI) said on Monday it was putting in place a mechanism for international trade settlements in rupees, which banks will need a prior approval to use.
The RBI’s move comes as the Indian rupee touches all-time lows amid continued foreign portfolio outflows from domestic stock markets and a broadly stronger greenback.
The rupee on Tuesday hit another record low of 79.66 against the US dollar.
India’s retail inflation reading due later in the day and the US consumer price index on Wednesday are keenly eyed by investors, as a spike in inflation would keep central banks on the path of aggressive rate hikes, according to analysts.
“The dominant factor influencing markets – equity, bond, currency and many commodities – is the sustained rise in the dollar which has gained momentum during the last one month. Dollar has appreciated 5 percent since early June and 13 percent so far in 2022. If this trend sustains, it is bad news for EM equity. But now it appears that this ‘flight to dollar safety’ is a bit overdone and due for some correction,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
“After TCS’ Q1 results indicating margin pressure for the industry, IT index has turned weak. But valuations for the segment are now fair. The most resilient segment in the market now is Bank Nifty and the leading stock is ICICI Bank. This resilience of the banking segment is likely to continue. Autos, capital goods and some segments of FMCG also are on strong wicket,” he added.
