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Fed's rate hike, growing intensity of the war between Ukraine and Russia and the resurgence of Covid in China took benchmark indices in the red zone on Tuesday
Photo Credit : PTI
Indian equity benchmark indices ended their five-day rally on Tuesday as investors remained apprehensive about the Federal Reserve's meeting and a possible rate hike. Also, the growing intensity of the war between Ukraine and Russia as well as the resurgence of Covid in China and the subsequent selloff in Chinese stocks took benchmark indices in the red zone.
The 30-share pack Sensex declined 709.17 points or 1.26 per cent to close at 55,776.85 whereas NSE Nifty50 slumped 202.55 points or 1.2 per cent to 16,668.75.
"Domestic markets closed lower as investors await on a resolution to the ongoing Russian-Ukraine conflict. The EU imposed a fourth round of sanctions against Russia and as investors remain wary on the outcome of the US Fed policy meeting. Moreover, February's retail inflation in India stood at 6.07 per cent, as against RBI's poll estimate of 5.93 per cent, which also impacted the market sentiments," said Mitul Shah, Head of Research at Reliance Securities.
The U.S. central bank's two-day meeting will commence later on Tuesday. The Fed is widely expected to raise its benchmark overnight interest rate by a quarter of a percentage point at the end of the meeting.
"Investors should not rush to buy the dip as the correction in the markets is not based on just one factor, Chepa said, with the war adding a lot of uncertainty," said Likhita Chepa, senior research analyst at CapitalVia Global Research in Mumbai.
Oil and Natural Gas Corporation was among the biggest percentage losers on the Nifty 50, falling 4.7 per cent, as oil prices tumbled more than 5 per cent. The Nifty energy index closed down 2.18 per cent.
Concerns over the fallout from surging COVID-19 cases in top consumer China pushed iron ore futures and industrial metals down globally. In Mumbai, the Nifty Metal Index lost 4.07 per cent. Steelmaker Tata Steel slid about 4.9 per cent.
"Our market was dealing with the resistance zone of 16800-17000 as it was the 50% retracement of the recent correction and the call option writers too started building up positions at 17000 strike. As the Nifty breached the 16800 mark, the bulls gave up and then we witnessed a sharp sell-off for rest of the session. Post the recent rally, the momentum readings were overbought as the index approached its resistance zone of 16800-17000," said Ruchit Jain, Lead Research, 5paisa.com.
Among other stocks, digital payments company Paytm tumbled 12.2 per cent, extending its slump amid mounting regulatory woes and a decision by investor SoftBank's representatives to leave the company's board.
"We are of the view that, as long as the Nifty holding the levels of 16500-16400 the uptrend is intact. On the higher side the immediate hurdle would be 16900-16950. On the downside, any fall below 16400 may increase further weakness up to 16350-16300. In the coming days, the markets are expected remain volatile hence level based trading would be the ideal strategy for the day traders," said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities