Headline indices Sensex and Nifty snapped their 5-day winning streak on March 15 as concerns over Russia-Ukraine ongoing war, rising Covid cases in China and anticipation that the US Fed may raise interest rates this week due to sharp rise in inflation, hit market sentiment.
Media reports suggested that the fourth round of diplomatic talks between Russia and Ukraine were held on March 14 but ended without a breakthrough, dashing the hopes of a truce between the two countries. In its third week, Russia's offensive in Ukraine continues relentlessly despite four rounds of talks and global pressure.
China is witnessing a fresh surge of coronavirus infections and has locked down a coronavirus-hit northeastern province as the rapidly spreading stealth omicron variant fuels the country's biggest outbreak since the start of the pandemic two years ago. A sub-lineage of the omicron coronavirus variant— BA.2 - has been named by some scientists as stealth omicron which has been reported to spread faster than the original omicron.
Investors are anxiously awaiting the outcome of the two-day (March 15-16) US Federal Open Market Committee (FOMC) meeting which may raise rates for the first time since the pandemic. US Fed's move will be a strong signal for the other major central banks of the world who are struggling to strike a balance between growth and inflation, experts point out.
Crude oil prices fell today with Brent Crude falling about 6 percent and trading near $100 a barrel owing to concerns over demand after China imposed lockdown in some areas to stop the spread of Covid-19.
Sensex closed 709 points, or 1.26 percent, down at 55,776.85 while the Nifty50 fell 208 points, or 1.23 percent, to 16,663. BSE Midcap and smallcap indices closed 0.68 percent and 0.88 percent lower, respectively, outperforming the benchmark index.
"The world equity market lost its momentum as new financial and trade sanctions were imposed on Russia along with the suspension of gas imports. It is a setback for the market sentiment, which was improving in anticipation of a truce in war. The Indian market was outperforming due to ease in commodity prices. World markets are also lower ahead of the US Fed meeting in which the market widely expects FOMC to initiate a rate hike," said Vinod Nair, Head of Research at Geojit Financial Services.
Among the sectors, BSE Metal cracked 4.34 percent, emerging as the top laggard among peers. BSE Oil & Gas, IT, Energy and Teck ended with losses of over 2 percent each.
The overall market capitalisation of BSE-listed firms fell to ₹251.7 lakh crore from ₹254.3 lakh crore in the previous session, making investors poorer by ₹2.6 lakh crore in a single day.
However, despite the market fall, more than 100 stocks, including Cipla, West Coast Paper Mills, Dalmia Bharat Sugar and Industries, Dhampur Sugar Mills, JK Paper, Linde India, Polyplex, Triveni Engineering & Industries and Usha Martin, hit their fresh 52-week highs on BSE.
The market witnessed profit booking and failed to sustain above the level of 16,800 and now Nifty has 16,600 as an important support level.
"Market research suggests that 16,600 is an important support level. If the market is unable to sustain above this level, we expect the correction to continue till the level of 16,400," said Vijay Dhanotiya, Lead - Technical Research at CapitalVia Global Research.
"The momentum indicators like RSI and MACD are indicating positive momentum in the market. The correction could continue in the first half tomorrow and then we can expect a bounce from the level of 16,400," said Dhanotiya.
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