Frontline indices the Sensex and the Nifty fell more than a percent each on September 1 as investors booked profit amid weak global cues.
Investors across major markets of the world remained nervous due to the prospects of aggressive rate hikes, a lingering recession and rising geopolitical tensions.
Investors anticipate European Central Bank will raise its policy rate by a record 75 basis points next week. Macroeconomic indicators show signs of stress in large economies like China, the US and the UK.
India's Gross Domestic Product (GDP) in the April-June quarter of this fiscal year (Q1FY23) grew by 13.5% but missed the RBI estimates of 16.2%.
On the geopolitical front, media reports suggested heavy shelling at Ukraine's giant Zaporizhzhia nuclear plant. The Taiwan episode is also causing worries. Reuters reported that Taiwan's military for the first time shot down an unidentified civilian drone that entered its airspace near an islet off the Chinese coast on September 1.
The market is reeling under pressure due to a spat of negative news. Investors are booking profit after every rise.
Sensex fell 770 points, or 1.29%, to 58,766.59 while the Nifty ended the day with a loss of 217 points, or 1.22%, at 17,542.80.
Volatility index India VIX jumped over 6% to 19.87 level.
Shares of Bajaj Finserv, Asian Paints and Bharti Airtel ended as the top gainers in the Sensex index while those of Reliance Industries, TCS and Sun Pharma ended as the top laggards. As many as 23 stocks ended in the red in the 30-share pack Sensex.
However, the mid and smallcaps outperformed, ending in the green. The BSE Midcap index rose 0.57% and the Smallcap index ended 0.48% higher.
Among the sectoral indices, BSE Energy, IT, Oil & Gas, Metal and Teck fell up to 2%. However, the telecom index bucked the trend and rose more than 2%, thanks to gains in shares of Tata Teleservices, Tata Communications and Bharti Airtel.
“Markets remained volatile during the week as benchmarks simply followed weak global cues and tanked over 1%. The dismal manufacturing data in Europe and Asia worsened the sentiment and reignited fears of slackening global demand," said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.
"Markets failed to cheer the strong GST collections for August, as the hawkish Fed stance and the prospects of further rate hikes impacting growth going ahead continued to make investors nervous," he added.
Crude oil prices fell sharply amid concerns over demand due to the prospects of weak global growth. Brent Crude traded below the $95 a barrel mark.
The rupee fell almost 10 paise to close at 79.56 per dollar as the US dollar rose to a multi-year high against major currencies amid the talks about sharp rate hikes.
Even as the benchmarks ended lower, as many as 225 stocks hit their fresh 52-week highs in intraday trade on BSE.
Among the stocks that hit their 52-week highs were ITC, Mahindra & Mahindra, Maruti, Bank of Baroda, Ceat, Escorts Kubota and Coal India.
"Investors have to exercise caution since valuations are high and the global growth environment is not favourable for a sustained bull market. Even while remaining invested, some profit booking may be a good idea," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
As per Chouhan, 17,450 would be the important support level while 17,700 could be the immediate hurdle for the market. Below 17,450, the Nifty could slip till 17,350-17,300. A fresh uptrend is possible only after the 17,700 range breakout. Above the same, the index could move up to 17,820-17,850, he said.
Rupak De, Senior Technical Analyst at LKP Securities pointed out that the momentum indicator is in a bearish crossover indicating a bearishness. On the lower end, 17,400 may continue to act as crucial support, below which the index may become weak again. On the higher end, resistance is visible at 17,700, said De.
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.