Sensex, Nifty caught in the red for 3rd day as heavyweight HDFC Bank slides

Market breadth improved as the session profit, with the number of gainers increasing through the session.

Indian equity benchmarks the 30-pack Sensex and the broad-based Nifty continued to selling selling for the third straight session, largely dragged by index heavyweight HDFC Bank, that was too, was down for yet another session on January 18.

Shares of HDFC Bank had plummeted over 8 percent in the previous session as its disappointing Q3 numbers irked investors. The selling spilled over to today's session as well, as the stock was down another 2.5 percent.

Given that the banking bellwether makes up over 13 percent of the total weightage in Nifty 50, a fall in the stock put pressure on the headline index.

Sluggish global cues, sharp selling in frontline stocks like HDFC Bank, Asian Paints and LTIMindtree together pulled down the market, a day after it had its worst fall in 19 months .

At 1 pm, the Sensex was down 387.29 points or 0.54 percent at 71,113.47, and the Nifty was down 127.50 points or 0.59 percent at 21,444.50.

However, market breadth improved from earlier in the day as number of gainers increased as the session progressed. About 1,516 shares rose, 1,629 fell, and 82 were unchanged.

Here are the some  factors that are guiding markets:

1 Rate-cut delay worries 

US Federal Reserve governor Christopher Waller's recent comments that a pivot in the monetary policy may come slower than anticipated continued to haunt investor sentiment.

Following the hawkish remarks, investors are now skeptical of the Federal Reserve pulling a trigger on rate cuts at its March meeting. Expectations are that the much-awaited cut will now be in June.

2 US bond yields and dollar index rise

As hopes of a rate cut in March begin to fade, the yields on the US benchmark 10-year treasury bonds bounced back to levels above 4 percent. Currently, the yields are firm at 4.09 percent.

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The dollar index also rose to above 103 after hitting a one-month high in the previous session. The spike also negatively impacted metal stocks, which have been struggling with sharp cuts.

3 Sluggish global cues

A hawkish Fed and the yield spike dented investor sentiment across the globe, resulting in  subdued trade in most global markets. The three benchmarks in the US ended lower on January 17. The Dow Jones Industrial Average fell 0.3 percent and S&P 500 and NASDAQ 100 each closed 0.6 percent lower.

Australia's S&P ASX 200 was on course to end the fifth straight session in the red. Markets in Japan and South Korea traded flat.

4 Break below key levels 

The Nifty broke below its key support of 21,550, its 21-day moving average (DMA) which triggered more downside pressure for the index.

Analysts had warned that the sentiment would worsen if the Nifty drops below 21,550. "This may result in the index slipping to 21,350, while on the upside, resistance is likely to be seen at 21,650," Rupak De, Senior Technical Analyst, LKP Securities, said.

Also Read | As markets fall for 3rd straight day, Nifty may test 21,000, Bank Nifty likely to be rangebound

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