Sensex tumbles 566 points, Nifty drops 149 points on profit taking in banking, IT sector shares

Benchmark BSE Sensex tumbled 566 points to close below the 60,000-level on Wednesday, extending its losses for a second day due to profit taking in banking and IT stocks amid a fall in global stocks.

The 30-share BSE barometer tanked 566.09 points or 0.94 per cent to settle at 59,610.41 as 20 of its constituents closed in red. During the day, it plunged 666.66 points or 1.10 per cent to 59,509.84.

The broader NSE Nifty declined by 149.75 points or 0.83 per cent to settle at 17,807.65 with 30 of its stocks ending with losses.

Analysts said rate-sensitive stocks declined as US Federal Reserve Governor Lael Brainard's comments fueled expectations of more aggressive US rate hikes and the White House announced more sanctions on Russia.

"Markets inched lower for the second consecutive session. Weak global cues viz. hawkish commentary from the US Fed and the possibility of fresh sanctions on Russia largely impacted investors’ sentiment," Ajit Mishra, VP - Research, Religare Broking Ltd, said.

"The main indices are muted due to drop in HDFC group stocks after the rally, the subdued performance of IT sector in anticipation of weak results on a QoQ basis and weak global cues. We can expect volatility in the near-term ahead the RBI policy meet," said Vinod Nair, Head of Research at Geojit Financial Services.

The Fed Governor said the central bank is set to keep raising rates after its March hike and might decide at its May meeting to reduce bond holdings “at a rapid pace”.

HDFC Bank fell the most by 3.51 per cent among Sensex stocks. HDFC tanked 3.26 per cent due to profit taking.

HCL Tech dropped by 2.07 per cent, Tech Mahindra by 1.97 per cent, Infosys by 1.75 per cent and TCS by 1.52 per cent.

Among banking stocks, Kotak Bank fell by 1.27 per cent, Axis Bank by 1.26 per cent and IndusInd Bank by 0.68 per cent.

Reliance Industries, M&M, Dr Reddy's, Wipro, Bajaj Finance, and Titan also declined.

On the other hand, NTPC emerged as the lead gainer among index stocks, rising by 2.61 per cent. Tata Steel rose by 1.94 per cent, Power Grid by 1.52 per cent and Bharti Airtel by 1.17 per cent. Nestle, L&T, SBI and Asian Paints also advanced.

"Domestic equities moved in tandem with US markets to close lower, fuelled by investors’ expectation of a stricter interest rate hike by Fed," according to Mitul Shah, Head Of Research at Reliance Securities.

In the broader market, the BSE midcap index gained 0.41 per cent and smallcap gauge jumped 0.38 per cent.

Among BSE sectoral indices, IT declined 1.40 per cent, financial by 1.25 per cent, teck by 1.22 per cent and banking by 1.04 per cent.

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd, said, "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."

The Reserve Bank of India's rate-setting panel on Wednesday started discussions to firm up the next bi-monthly monetary policy amid expectations that it might retain status quo on interest rate but change its monetary policy stance amid rising inflation on account of geopolitical developments.

On Tuesday, the BSE Sensex slumped 435.24 points or 0.72 per cent to finish at 60,176.50. Similarly, the NSE Nifty tumbled 96 points or 0.53 per cent to 17,957.40.

Meanwhile, international oil benchmark Brent crude gained 0.93 per cent to USD 107.6 per barrel.

Elsewhere in Asian markets, bourses in Hong Kong, Tokyo and Seoul settled lower, while Shanghai was in the green. Indices in the US also ended on a lower note on Tuesday.

Foreign portfolio investors bought shares worth Rs 374.89 crore on Tuesday, according to stock exchange data.

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