Markets snap rally as profit booking hits tech stocks

The post-Budget rally lost steam on Thursday, with equities extending losses amid profit booking at upper levels. Both the Sensex and Nifty-50 declined over 1% during the day. According to experts, a shift of focus from the Budget to global cues led to the weakness in the markets. After a 4.1% rally in the current week, the Sensex settled 770.31 points or 1.29% lower at 58,788.02 on Thursday while the Nifty-50 closed at 17,560.20, down 219.80 points or 1.2%. Broader markets also ended lower, in line with the benchmark indices.

Foreign portfolio investors continued to offload Indian shares, but inflows into debt remained positive through January. FPIs sold shares worth Rs 183.6 crore on Wednesday, while local institutional investors bought shares worth Rs 425.96 crore, showed provisional data from the NSE.

Siddhartha Khemka, head – retail research, Motilal Oswal Financial Services, said: “After a post-Budget rally, domestic equities witness selling pressure amid weak global cues. The Nifty opened negative as profit booking emerged at higher levels. Market is witnessing a pause in its momentum as the focus now shifts away from Budget to interest rate/inflation.”

On the BSE, the overall market breadth remained positive as 1,712 shares advanced while 1,641 declined. Among the 30 stocks in the BSE index, HDFC was the top loser, down 2.2%, after reporting a rise in its non-performing assets in Q3 earnings. Infosys, Larsen & Toubro, Bajaj twins, and Tech Mahindra were other top losers in the day. On the other hand, ITC, Maruti Suzuki, Titan and SBI ended among the gainers.

Sectorally, barring automobiles, all other sectors witnessed selling pressure and ended in the red. The Nifty IT was the top loser, falling more than 2% amid a sell-off in technology stocks in the global markets.

Markets are expected to remain volatile in the near to short term given the possibility of an interest rate hike in March by the Fed, and the upcoming RBI monetary policy, said analysts. The earnings season will continue to provide stock-specific action going forward.

“The markets saw some traction amid a growth-focused Budget. However, we can expect some volatility going forward as we move towards the interest rate cycle and other global factors continue to be in play. The RBI policy in the coming week will also be an important event with a possibility of a hike in the reverse repo rate,” Aishvarya Dadheech, director & fund manager, Ambit Asset Management Company, told FE.