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Last Updated : Apr 10, 2019 04:54 PM IST | Source: Moneycontrol.com

Sensex falls sharply in late trade; 5 factors that dragged the benchmark indices

Traders could be cautious ahead of the voting for first phase of Lok Sabha elections 2019 which will take place on April 11.

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After starting the day marginally lower, benchmark indices extended their fall in late trade as traders booked profits ahead of polling which begins on April 11 and will continue till May 19.

The 30-share BSE Sensex plunged 353.87 points, or 0.91 percent, to 38,585.35 and the Nifty50 dipped 87.70 points to 11,584.30 dragged by sectors like banking & financials and technology.

The market breadth was also weak as about 974 shares declined against 757 advancing shares on the NSE.

However, the broader markets managed to outperform frontliners and ended mixed with the Nifty Midcap index falling 0.3 percent and Smallcap index gaining 0.35 percent.

"Volatility is likely to remain high in the near term, hence we continue to remain cautious on the Indian market," Jayant Manglik, President - Retail Distribution, Religare Broking told Moneycontrol.

"Further, the trend of the market is likely to be dictated by domestic events like Q4FY19 earnings season and domestic macro data (IIP & CPI). Moreover, market participants would keenly watch the elections," he said.

Here are five key factors that pushed the market lower:

Bank Nifty loses ground dragged by HDFC Bank

Banking & financials space was the key driver for today's fall as the Nifty Bank declined a percent, majorly dragged by HDFC Bank, one of the index heavyweights.

HDFC Bank shares dropped 2.2 percent on reports that private equity giant KKR & Co may have offloaded 0.42 percent stake in the country's second largest private sector lender.

More than 1 crore shares (representing 0.4 percent of total paid-up equity) changed hands in multiple blocks on April 10, reported CNBC-TV18.

Among others, Bank of Baroda, State Bank of India, PNB, IndusInd Bank and ICICI Bank were down between 1 percent and 2 percent.

Crude prices gain

Oil prices climbed above crucial USD 70 a barrel mark, moving towards its five-month high as OPEC production cuts and US sanctions on Iran and Venezuela continued.

Brent crude futures, the international benchmark for oil prices, traded at $70.94 a barrel, up 0.47 percent at the time of publishing this copy. It rallied more than 40 percent from lows of December 2018.

India imports more than 80 percent of its oil requirement, so any rise in prices is always negative for India.

"The global crude oil price is the single biggest factor which can determine India’s macro stability, INR strength and hence, it shapes the health of the Indian economy," Centrum Research.

Technology stocks were weak

Technology stocks also corrected sharply ahead of March quarter earnings. TCS and Infosys which will kick off quarterly earnings season on April 12.

The Nifty IT index fell 0.8 percent as TCS declined more than 2 percent and Infosys slipped 1 percent.

Brokerages largely expect TCS to report around 2 percent sequential constant currency growth in Q4. Dollar as well as constant currency revenue growth for Infosys is expected to be around 2-2.5 percent, but the key thing to watch out for would be its FY20 revenue growth guidance.

Caution Ahead of 1st Phase of General Elections

Traders could be cautious ahead of the voting for first phase of Lok Sabha elections 2019 which will take place on April 11.

The voting will be for 91 seats in 20 states, which are Telangana, Andhra Pradesh, Assam, Arunachal Pradesh, Bihar, Jammu & Kashmir, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Sikkim, Tripura, Uttar Pradesh, West Bengal, Chhattisgarh, Uttarakhand, Lakshadweep and Andaman & Nicobar.

Technical Outlook

Nifty failed to surpass 11,680 zone and gradually fell towards 11,570 zone in later part of the trading session, before closing at 11,584.30.

The index formed an Inside Bar or a Harami pattern on daily scale which indicates a tug of war between bull and bear to make or break 11,550 zones, experts said.

"It has been consolidating in 11,550-11,750 zones from last nine trading sessions. Now if it fails to hold 11,550 zones then a short term profit booking decline could be seen towards immediate support of 11,520-11,500 zones while hurdles are placed at 11,666 and 11,680 zones.

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First Published on Apr 10, 2019 04:54 pm
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