Domestic equities witnessed a sharp selloff on January 10, mirroring weak global sentiment, as investors booked profits across sectors ahead of comments from Federal Reserve Chairman Jerome Powell later today.
The market mood was dealt a blow after Fed officials hinted it was early to say whether the pace of rate hikes will ease or not.
"Federal Reserve policymakers say fresh inflation data out later this week will help them decide whether they can slow the pace of interest rate hikes at their upcoming meeting, to just a quarter-point increase instead of the larger jumps they used for most of 2022," reported Reuters.
After opening 58 points higher at 60,805.14, Sensex fell 809 points to hit the intraday low of 59,938.38. The index finally closed 632 points, or 1.04 percent, lower at 60,115.48. Nifty50 fell 187 points, or 1.03 percent, to 17,914.15.
Mid and smallcaps also declined but still outperformed their larger peers. The BSE Midcap index fell 0.49 percent while the Smallcap index declined 0.46 percent.
The overall market capitalisation of BSE-listed firms dropped to ₹280.8 lakh crore from ₹283 lakh crore in the previous session, making investors poorer by ₹2.2 lakh crore in a single day.
Weak global sentiment weighed on crude oil prices too. Brent Crude traded near the $80 per barrel mark. The rupee witnessed a sharp jump after the greenback eased. The domestic currency closed with a gain of 57 paise at 81.79 per dollar.
Top Sensex gainers: Shares of Tata Motors, Power Grid and Tata Steel ended as the top gainers in the Sensex index.
Top Sensex losers: Shares of Bharti Airtel, SBI and HDFC Bank ended as the top Sensex losers.
Barring Nifty Auto (up 0.28 percent) and Nifty Healthcare (up 0.13 percent), all sectoral indices ended with losses.
Banking and financial stocks suffered strong losses. Nifty PSU Bank lost 2.67 percent, ending the day as the top sectoral loser. Nifty Bank (down 1.33 percent), Private Bank (down 1.13 percent) and Financial Services (down 1.37 percent) fell over a percent each.
Experts' views on markets
Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities observed that local investors have been following global cues, and weakness in European and US markets triggered a downfall in domestic equities, which saw the Nifty end below the crucial 18,000 mark.
Chouhan said that trading sentiment has been very weak, and most sluggish external factors are prompting investors to book profit at regular intervals.
Ajit Mishra, VP of Technical Research at Religare Broking said the markets are gradually drifting lower amid volatility and indications are pointing towards more pain ahead.
"Mixed global cues combined with earnings season would keep traders on the edge. We reiterate our view to limit positions and prefer a hedged approach, especially for the overnight trades," said Mishra.
Technical views by experts
Chouhan said the Nifty has formed a long bearish candle on daily charts indicating further weakness from the current levels.
"For bulls, 18,000 would be the key level to watch out for, and above this level, the index could retest the level of 18,100-18,150. On the flip side, 17,800 would act as a sacrosanct support zone, below which selling pressure is likely to accelerate and drag the index down to 17,700-17,675," said Chouhan.
Nifty formed a bearish candle on the daily chart. As the index remains below 18,000, weakness may be seen towards the 17,800-17,700 zone, said Om Mehra, an equity research analyst at Choice Broking.
Mehra pointed out that on the derivatives side, the highest Call open interest (OI) was seen at 18,100, followed by 18,200 strike prices, while on the Put side, the highest OI was seen at 17,700 strike price.
"We advise investors to remain cognizant of prevailing risks related to the macroeconomic environment. Many of the quality stocks have corrected meaningfully in the last couple of weeks, and could give healthy returns in the short term," said Mehra.
Key market data
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of MintGenie.