Benchmark indices the Sensex and the Nifty fell over a percent on March 19, dragged by index heavyweights like TCS, Infosys and HDFC Bank. The negativity in Hong Kong and China markets after the Bank of Japan's decision to hike interest rates after 17 years spilled over to the Indian market.
Investors also remained cautious ahead of the US Fed meeting outcome due March 20. In the absence of any major domestic events, market participants will continue to take cues from the global events.
The Sensex closed 736.37 points, or 1.01 percent, lower at 72,012.05, and the Nifty ended 242.20 points, or 1.10 percent, down at 21,813.50. About 1,194 shares advanced, 2,427 declined and 116 were unchanged.
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What pulled indices down?
Negative global cues
Asia-Pacific markets largely fell as investors digested the Bank of Japan's (BOJ) move to end its negative interest rate policy at its March meeting. The central bank hiked interest rates for the first time in 17 years and raising its benchmark interest rate from -0.1 percent to a range of 0 to 0.1 percent. Marking a historic shift, BOJ also abolished its yield curve control policy.
Hong Kong's Hang Seng index fell a percent, dragged by tech stocks. China's Shanghai and Shenzhen indices fell half a percent. Japan's Nikkei, however, bucked the trend to rise 0.6 percent. Contracts for US shares pointed to losses. European markets were trading flat with Stoxx 600 down 0.02 percent.
IT stocks drag
TCS was the top drag, falling over 3 percent after 2.2 crore shares of the IT services company changed hands in a block deal. Other IT counters such as Infosys, HCL Tech and Wipro also traded with cuts, weighing on the index. The IT index fell over 2 percent, becoming the worst sectoral loser.
FIIs in 'sell' mode
Foreign institutional investors (FIIs) net sold shares worth Rs 2,051.09 crore on March 18. So far this month, FIIs have offloaded shares worth Rs 231,906.03 crore.
Oil turmoil
The surge in crude oil prices has also put investors on edge. Both Brent and WTI crude went up more than 4 percent in the previous week, driven by expectations of a tighter market.
The trend has continued this week, as both Brent and WTI prices climbed 2 in the previous session, reaching their highest levels since late October amid escalating geopolitical tensions and dropping crude exports.
While the price edged down on March 19, Brent crude remains above $86 a barrel. According to analysts, while the crude price is not a major concern for Indian equities at the moment, a rise beyond $90-$100 may raise impact bond markets.
Markets to consolidate in near term
In the near term, a change in the global market construct will happen if the US Fed sends a hawkish message stronger than market expectations. "The spike in the dollar index and the US bond yields reflect this concern," said VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services. Investors may wait for clarity to emerge on the Fed response, he added.
Siddhartha Khemka, Head-Retail Research, Motilal Oswal Financial Services Ltd, expects the markets to consolidate over the next few days, while the broader market is likely to remain subdued.
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