Stock benchmark indices fell in early trading on Wednesday, along with weak trends in global markets ahead of the US Federal Reserve’s interest rate decision. The BSE Sensex fell 700 points or 1 percent to below the 67,000 level. It reached the day’s low of 66,887.99. Meanwhile, Nifty50 fell to 19,936, down 0.98 percent or 198 points. The market capitalization of all listed companies on BSE fell by Rs 1.92 lakh crore to Rs 321.08 lakh crore.
Parth Nyati, Founder, Tradingo, said, “Today, both Nifty and Sensex posted gains, largely attributed to a sharp sell-off in HDFC Bank after the analyst meet. During the meeting, concerns were raised over possible pressure on margins and asset quality following the merger of the HDFC twins. Moreover, global markets showed caution ahead of the upcoming FOMC meeting. Factors such as rising US bond yields, weakness of the rupee, surge in crude oil prices and selling by foreign institutional investors (FIIs) have further contributed to the challenges faced by our markets.”
Among the Sensex pack, HDFC Bank, RIL, JSW Steel, Maruti and UltraTech Cement were the biggest losers.
HDFC Bank fell 3 percent after the bank on Monday said its gross non-performing assets are likely to increase from July 1, post its merger with HDFC.
Shares of Bharat Dynamics rose 3 per cent higher after the company signed a contract worth Rs 291 crore with IAF.
Sector-wise, Nifty Financial Services fell 0.87 percent and Nifty Bank fell 0.68 percent. The FMCG, IT, pharmaceutical, real estate and healthcare sectors also opened lower. In the broader market, Nifty Midcap100 gained 0.05 percent, while Smallcap100 opened flat.
This is what is driving the Indian stock markets down
HDFC shares sink: HDFC Bank Ltd., India’s largest private lender, saw its share prices fall by more than 4 percent in Wednesday’s trading after brokerage firms expressed mixed views on the stock following the bank’s meeting of analysts and institutional investors.
Nishit Master, portfolio manager at Axis Securities PMS, said, “HDFC Bank has commented on margin pressure due to excess liquidity and merger-related costs, which will remain high in the near term. This development has led to earnings cuts for HDFC Bank for FY24, increasing pressure on the stock.”
Outcome from the US Fed: Asia-Pacific markets fell largely on Wednesday as investors remained on the sidelines ahead of the US Fed’s interest rate decision later tonight.
The Federal Reserve is widely expected to keep interest rates steady, but the central bank will provide an update on its economic outlook with the summary of economic projections.
Oil prices: The price of Brent crude oil, which was above the $96 per barrel mark overnight, hovered around $93 per barrel on Wednesday.
Analysts at Jefferies believe fiscal pressure on the Indian economy is gradually increasing as oil prices, which are close to $100 per barrel (Brent), may continue to rise ahead of a busy election calendar.
Interest on US government bonds: US yields hit a 16-year high ahead of the close of the Federal Reserve’s policy meeting on Wednesday. Ten-year U.S. Treasury yields hit a session high of 4.371 percent overnight on Tuesday, the highest level since early November 2007.
Five-year Treasury yields also hit a 16-year high of 4.524 percent, while the two-year Treasury yield hit a two-month high of 5.114 percent.
Technical outlook: From a technical perspective, Nifty and Sensex have identifiable immediate support levels at 19,900 and 66,900 respectively. If these levels are breached, we may witness additional profit booking, which could potentially lead to 19,640 for Nifty and 66,000 for Sensex.
What should investors do now?
Master said: “We remain constructive on the markets and believe that if you have a three to five year view, you can continue investing even at current high levels. Investors looking to increase their stock allocation should spread their purchases over the next three months to take advantage of a potential market decline.”
Disclaimer:Disclaimer: The views and investment tips expressed by experts in this News18.com report are their own and not of the website or its management. Users are advised to contact certified experts before making any investment decisions.
