Snapping its two-day winning run, the Indian stock market's benchmark index, the Nifty 50, closed almost a percent lower on Monday on losses led by banking heavyweights, including HDFC Bank and ICICI Bank amid weak global cues. Stock market sentiment worldwide appears fragile as the year draws to a close, aided by a strengthening US dollar and rising bond yields.
Investors are holding their bets for riskier equities amid prevailing uncertainty surrounding Donald Trump's tariff policies. US President-elect Donald Trump will join office on January 20. According to experts, Trump's policies on trade could significantly impact the dollar-rupee dynamics, foreign capital flow into India, and the US Federal Reserve's fight against inflation.
The Nifty 50 closed with a loss of 169 points, or 0.71 percent, at 23,644.90, while the Sensex settled at 78,248.13, down 451 points, or 0.57 percent.
As many as 38 stocks ended in the red in the Nifty 50 index. Shares of HDFC Bank, ICICI Bank, Infosys, Reliance Industries, and Tata Motors ended as the top drags on the Nifty index. The BSE Midcap index climbed 0.13 percent, but the Smallcap index fell 0.47 percent.
“Markets lost momentum in the second half and fell sharply thereafter as weak Asian and European cues coupled with nervousness over the falling rupee and renewed foreign fund flows prompted investors to reduce equity holdings. We suspect rising US bond yields are likely to be the biggest negative catalyst going forward, with the US 10-year US bonds yields spiking to 4.61 percent, the highest in seven months,” Prashanth Tapse of Mehta Equities observed.
Among the sectoral indices, the Nifty Media (down 1.87 percent), Realty (down 1.54 percent), Auto (down 1.43 percent), and Metal (down 1.27 percent) lost up to 2 percent.
All banking and financial indices suffered. The Nifty Bank index dropped 0.70 percent, while the PSU Bank and Private Bank indices fell 1.18 percent and 0.63 percent, respectively. The Nifty Financial Services index fell by almost a percent. On the flip side, the Nifty Healthcare and Pharma indices rose by over a percent.
"Prevailing subdued sentiment on account of FIIs selling and a strengthening dollar continued to drag the market. While IT & pharma gained as investors continued to bet on defensive stocks to prevent short-term volatility. Concerns over high valuation are impacting the broad market," said Vinod Nair of Geojit Financial Services.
(By arrangement with livemint.com)
