The benchmark equity indices pared early gains and settled lower on Thursday, as the U.S. dollar hovered near a five-month high and foreign fund outflows continued.
Falling for the second day in a row, the Sensex declined 148.14 points or 0.18 percent to settle at 83,311.01. During the day, it hit a high of 83,846.35 and a low of 83,237.65. The Nifty dipped by 87.95 points or 0.34 percent to 25,509.70.
Asian Paints, InterGlobe Aviation and Reliance Industries were among the top gainers in the Niftyu50 pack, rising up to 5 percent, while Hindalco Industries and Grasim Industries were the major laggards, declinin up to 6 percent.
Key factors behind market decline
1) FII selling continues: Foreign Institutional Investors (FIIs) remained net sellers, offloading equities worth Rs 1,067.01 crore on Tuesday. This marked the fifth consecutive session of FII outflows since October 29, dampening market sentiment.
2) Profit booking in key sectors: Profit booking was visible in banking, financial services, metal shares among others. The Nifty Metal index fell over 2 percent as the dollar strengthened. A stronger dollar typically makes commodities priced in the greenback costlier for importers, weighing on demand and impacting metal companies.
3) Dollar near five-month high: The U.S. dollar stayed firm at a five-month high after recent economic data eased concerns about the U.S. economy and labour market. The dollar index, which measures the greenback against a basket of six major currencies, was steady at 100.16 — up 1.5 percent since last Wednesday, when the Federal Reserve cut interest rates but signalled a slower pace of easing. The firm dollar has added pressure on emerging market currencies and commodities, including metals, which are sensitive to global price movements.
4) Expiry-day volatility: Traders attributed the intraday swings to expiry-related movements, as weekly derivatives contracts expire today. Market volatility typically rises on expiry days as traders square off or roll over their positions.
Technical view
Anand James, Chief Market Strategist at Geojit Financial Services, said the 20-day simple moving average (SMA) helped prevent a sharper decline on Tuesday. "A pullback is possible if Nifty sustains above 25,630–25,650 levels. A move beyond this range could take the index towards 25,770 or even 26,035 in a positive scenario," he added.
(Inputs from Reuters)
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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