The equity benchmark indices Sensex and Nifty settled lower on August 12 in a highly volatile trade dragged down by blue-chip bank stocks and caution ahead of domestic and US inflation data.
Sensex dropped 368.49 points or 0.46 percent to settle at 80,235.59. During the day, it hit a high of 80,997.67 and a low of 80,164.36, gyrating 833.31 points. The Nifty went lower by 97.65 points or 0.40 percent to 24,487.40.
Bajaj Finance, Trent, Hindustan Unilever, HDFC Bank, Eternal, Bajaj Finserv, ICICI Bank, and Bharat Electronics were among the laggards.
Key factors behind the decline:
1) Caution ahead of Trump-Putin meet: Investors stayed guarded ahead of the scheduled meeting between US President Donald Trump and Russian President Vladimir Putin in Alaska on August 15. Analysts said while the recent 90-day US-China trade truce supported IT stocks, broader gains are likely to remain capped until clarity emerges from the US-Russia talks.
"The 90-day extension of trade truce between U.S. and China is positive news (for sectors like IT). However, we do not expect a major rally as the main event that markets are focused on is Trump-Putin meeting in mid August," Pankaj Pandey, head of retail research at ICICI Securities told Reuters.
2) Awaiting India, US inflation data: Market participants awaited India’s July retail inflation figures, due after market hours, and the US consumer price index data later in the day. The US numbers are expected to guide the Federal Reserve’s interest rate outlook, while a Reuters poll forecast India’s inflation at an eight-year low of 1.76 percent on easing food prices.
3) FII selling: Foreign Institutional Investors sold shares worth Rs 1,202.65 crore on Monday, exchange data showed, adding to pressure on domestic equities.
4) Rising crude oil prices: Brent crude futures rose 0.33 percent to USD 66.85 a barrel, raising concerns over India’s import bill and inflation trajectory.
5) India VIX uptick: The India VIX, which measures market volatility, climbed over 1 percent to 12.35, indicating a rise in investor nervousness.
6) Weak global cues: Key Asian markets, including South Korea’s Kospi and Hong Kong’s Hang Seng, traded lower. US markets had also ended in the red on Monday.
Expert View
Sudeep Shah, Head - Technical Research and Derivatives at SBI Securities, noted "the market couldn’t build on Monday’s gains, showing that the current pullback is still weak and lacks strength within the larger downtrend. Despite a strong start to the week, Tuesday’s session saw Nifty give up early gains and close below 24500, down 0.40%. This lack of follow-through buying underscores the absence of conviction among participants, raising concerns about the sustainability of the recovery attempt. Without a decisive move higher, the pullback risks fizzling out, reinforcing the prevailing bearish undertone. Going ahead, the zone of 24360-24330 will act as immediate support for the index. While on the upside, the zone of 24620-24650 will act as a crucial hurdle."
"The broader market also showed signs of caution. The Nifty Midcap 100 index ended with a loss of 0.27%, while the Nifty Smallcap 100 closed flat, indicating limited participation beyond the large-cap space. Market breadth was slightly negative, with the advance-decline ratio tilted in favour of the bears. Out of the Nifty 500 universe, 272 stocks ended in the red, highlighting weakness across sectors," he added.
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