An evening walk down Dalal Street | Crude surge, weak financials weigh on Sensex, Nifty gives up 11,300

Bearish momentum continued on D-Street for the second consecutive day on Tuesday as a sharp selloff in the last hour dragged the market. The Nifty breached 11,300-mark and ended below it, while the Sensex closed around 300 points lower.

Investors turned wary of multiple factors such as US imposing tariffs on USD 200 billion worth of Chinese goods and services late on Monday.

Back home, banking names were he big laggards after the government proposed a merger between Bank of Baroda, Vijaya Bank and Dena Bank. As a result, PSU banks took a hit as traders placed mixed bets in names in this space.

Crude prices weighed on the market as well as traders reacted to statements from Saudi Arabia. Multiple news agencies reported that Saudi is comfortable with Brent crude prices hovering above USD 80 per barrel.

Adding to the pain was a weakening rupee, which fell to 72.75 per US dollar when the market came to a close.

The day began on a negative note, with investors reacting to tepid global cues as well as banking developments in India. Indices remained rangebound through the day, but it was the selloff in the last hour that impacted D-Street.

At the close of market hours, the Sensex ended lower by 294.84 points or 0.78% at 37290.67, while the Nifty fell 98.90 points or 0.87% at 11278.90. The market breadth is negative as 879 shares advanced, against a decline of 1,775 shares, while 178 shares were unchanged.

Shares of Hindustan Unilever and Yes Bank were the top gainers, while State Bank of India, Tata Motors, and Indiabulls Housing lost the most.

Stocks in News

Shares of Bank of Baroda (BoB) dropped more 16 percent, Vijaya Bank fell 6 percent, while Dene Bank was locked in 20 percent upper circuit. The stocks reacted to government announcements of proposing to merge the three public-sector banks (PSBs).

Indian Hume Pipe Company rose 3 percent after it bagged Rs 221-crore order from Madhya Pradesh government.

Meanwhile, Gujarat Gas fell 2 percent as possible profit booking dragged the stock. The company accepted authorisation from PNGRB for local natural gas distribution.

Hindustan Unilever gained 4 percent after broking house CLSA has maintained outperform rating with a target of Rs 1,950 per share. The management also guided for better performance in the quarters ahead.

OFS Technologies gained 13 percent after company approved a bonus share issue.

Lastly, shares of Tata Motors slipped 3 percent as JLR reportedly cut the production schedule at UK plant, according to PTI reports. JLR (Jaguar Land Rover) confirmed a cut in its production schedule at the Castle Bromwich plant manufacturing Jaguar cars in the West Midlands region of England due to "continuing headwinds" impacting the British car industry.

Global Markets

European markets were flat even as US decided to impose 10 percent tariffs on USD 200 billion worth of Chinese imports. Stoxx 600 index was trading 0.06 percent higher in the morning.

Meanwhile, Asian markets were positive too as investors looked to shrug off escalation in trade tensions between the United States and China. Nikkei 225 rose 1.41 percent to close at 23,420.54.

Going forward, experts continue to remain cautious on the back of global cues along with rupee’s weakness.

“In the near term, we continue to maintain a cautious stance on the markets as volatility and choppiness is likely to remain high led by uncertain global cues, crude oil price movement, depreciating rupee (vs dollar) and muted domestic sentiments. However any further correction at this juncture should be considered as a healthy buying opportunity for investors in quality companies with strong financials and bright outlook. Meanwhile traders should keep their over-leveraged position hedged,” Jayant Manglik, President, Religare Broking said in a statement.