Frontline indices the Sensex and the Nifty resumed their downward journey on March 2, a day after clocking healthy gains after eight straight sessions of losses.
Weak global cues amid concerns over rate hikes, slowing economic growth and rising US yields hit the risk appetite of investors.
As per Reuters, US benchmark 10-year Treasury yields hit a fresh four-month high of 4.028 percent, while two-year yields also advanced to 4.9310 percent, a fresh 15-year high.
Investors expect the Fed to raise rates by 25 basis points at its next meeting later in March. Some analysts believe Fed may hike rates by even 50 basis points.
Investors booked profit after the gains of the previous session. At one point in trade, the Sensex was down 545 points. It finally closed 502 points, or 0.84 percent, lower at 58,909.35 while the Nifty closed the day at 17,321.90, down 129 points, or 0.74 percent.
IT and banking stocks, including Infosys, TCS, HDFC Bank and Axis Bank were among the top drags on the Sensex index.
Mid and smallcaps also declined but still outperformed the benchmarks. The BSE Midcap index slipped 0.13 percent while the Smallcap index fell 0.22 percent.
Some 110 stocks, including Bayer Cropscience, Cipla, Laurus Labs and Relaxo Footwears, hit their fresh 52-week lows in intraday trade on BSE.
Crude oil prices were volatile on concerns over rising US inventories and rate hikes which could slow economic growth and hit crude demand. Brent Crude traded near the $85 per barrel mark.
The rupee slipped nearly 9 paise to end at 82.59 per dollar.
Top Nifty gainers: Shares of Adani Ports, Coal India and BPCL ended as the top gainers in the Nifty index.
Top Nifty losers: Shares of Maruti, Axis Bank and TCS ended as the top losers in the Nifty index.
As many as 36 stocks ended in the red in the Nify50 index.
Most sectoral indices ended with losses, except for the Nifty Realty which clocked a strong gain of 2.06 percent. Nifty Oil & Gas ended flat.
Among the losers, Nifty IT lost 1.26 percent. NIfty Bank, Auto, Financial Services and Private Bank indices fell up to a percent.
Analysts' views on markets
"Global markets turned back to selling mode with the US 10-year bond yield crossing 4 percent as a fresh set of US data suggested that inflation will remain elevated for a longer period. Rising bond yields are driving foreign money out of emerging markets, and as a result, FIIs were net sellers in the domestic market for the sixth consecutive day," said Vinod Nair, Head of Research at Geojit Financial Services.
"The risk-off sentiment continued to play as markets once again faltered on the back of weak global cues and sharp selling in technology stocks. There is a lot of pessimism in the markets due to raging concerns about more rate hikes and sticky inflation levels," said Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities.
Technical views on markets
Jatin Gedia, Technical Research Analyst, Sharekhan by BNP Paribas pointed out that after a positive close in the previous trading session, the Nifty did not witness follow-through buying interest in fact it closed below the low (17,345) of the previous trading session which is a sign of weakness.
"On the hourly charts, we can observe that the rise from the lows of 17,255 has been impulsive in nature indicating that a short-term bottom is in place and this dip is a retracement of that rise," said Gedia.
"It is trading in the crucial Fibonacci support zone 17,336 – 17,300 which are the 61.82 percent retracement level (17,336) and 78.6 percent retracement levels (17,300) respectively and we expect the Nifty to hold on to this support and resume its next leg of up move. Overall, we believe that the Nifty is a counter-trend pullback mode and the pullback is not complete yet," Gedia said.
Rahul Ghose, Founder & CEO of Hedged, an algorithm-powered advisory platform, observed that the maximum pain for Nifty today shifted to the 17,400 mark for the next week's expiry, indicating that this is the price, around which the next week's expiry may happen.
Ghose further said the monthly options open interest (OI) data is suggesting a bounce in the index from this level as the 17,500 PE still has high OI and this was followed up today with an addition in open interest at the 17,400 PE strike.
"It is not very common to see in-the-money put options having an increase in OI in a falling market. Traders should look for two levels on the downside, a day before yesterday's low at 17,250, which when broken makes the trend sideways-to-downward and 16740, which makes the trend completely downward," said Ghose.
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.