Sensex, Nifty slump amid weakness in banking stocks; broader indices outperform

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Equity benchmarks the Sensex and the Nifty continued to trade in negative territory on February 22 afternoon amid weakness in banking stocks and hawkish Fed meeting minutes reading. Analysts said that banking stocks need to be to propel benchmarks to new highs.

The Sensex and the Nifty were each trading 0.4 percent lower at 72,298 and 21,952, respectively. Broader markets, however, recouped some initial losses as Nifty Midcap 100 and Nifty Smallcap 100 indices gained 0.2 percent each.

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"The high-beta and supportive index Bank Nifty needs to be closely watched for developments as its set-up would dictate intermediate trend for the benchmark. The Nifty's strong close above 22,150-22,200 can help the index go higher for 22,350-22,400 zone," said Sameet Chavan, Head Research, Technical and Derivative - Angel One.

Minutes of the US Federal Reserve's February meeting, which were released the previous day, indicated that officials were in no hurry to lower interest rates. According to CME Fed-Watch tool, probability of rate cuts in March reduced to 6.5 percent on February 21 from 8 percent a day ago, whereas rate cut anticipation increased to 37.7 percent for July from 33.4 percent in the previous day.

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services believes that an important trend to watch now is huge delivery based buying in banking stocks, which are attractively valued in this expensive market. "Switching from over-valued mid and small caps to large private banks would be a smart move," he suggested.

Sectorally, Nifty Bank was the worst sectoral performer in the noon deals, followed by Nifty Pharma and Oil & Gas indices. On the flipside, Nifty IT and Media indices gained up to 0.7 percent in trade.

Fear gauge India VIX continued to remain cooled off mildly below 16 level.

ALSO READ: FIIs continue to dump financial services in Feb, stay bullish on IT, healthcare stocks

Nvidia's blockbuster earnings drive US futures, Asian markets higher

Globally, US major averages ended mixed overnight, but futures tied to Wall Street inched up. Dow Futures, S&P 500 Futures, and NASDAQ Futures surged up to 1 percent after Nvidia shares popped 9 percent in after-hours trade due to strong quarterly financials. The chip company's revenue rose a staggering 265 percent from a year ago, driven by its booming AI business.

Markets in Asia-Pacific, too, climbed this morning, with Japan's Nikkei 225 index at record highs of 38,924.8, surpassing the previous all-time high of 38,915.8 reached on 1989.

Besides, Australia's S&P 200 index traded marginally higher, while South Korea's Kospi was up 0.3 percent after Bank of Korea held interest rates steady 3.5 percent.

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