NEW DELHI: Domestic stock market fell sharply on Wednesday on monthly derivative expiry day, as foreign institutional investors (FIIs) continue to cut their exposure in local equities. The fall is also attributed to volatility and nervousness ahead of the Union Budget and US Federal Reserve’s February meeting that would decide the future course of rate hikes. Underwhelming quarterly earnings by India Inc has also dented investors’ sentiment.
BSE Sensex fell 774 points or 1.27% to 60,205 while the NSE Nifty50 shed 226 points or 1.25% to close below the 18,000 level at 17,891.95. The banking sector stocks bore the maximum brunt as Bank Nifty index fell 1,085 points, or 2.54%.
Among Sensex stocks, SBI fell the most by 4.3%. IndusInd Bank tanked by 4.26%, HDFC Bank by 2.78% and Axis Bank by 2.02%. HDFC, Tech Mahindra, ICICI Bank, Ultratech Cement, L&T, Bajaj Finserv, Reliance, HCL Tech, Asian Paints, Wipro and M&M were among the major losers. HUL, Maruti, Tata Steel, NTPC and Sun Pharma were among the handful stocks which posted gain on Wednesday.
Stocks of Adani group companies fell between 2% and 6% after short-seller Hindenburg Research accused the group of stock manipulation and said it holds short positions in those firms through US-traded bonds and non-Indian-traded derivative instruments.
“Two major events of 1 February -- the Union Budget and the Fed decision on interest rate -- have the potential to break this range. A good budget and positive commentary from the Fed can break the upper band. On the contrary, any negative budget proposal like raising the rate of Long Term Capital Gains Tax or a worse-than-expected hawkish Fed can break the lower end of the range. Let’s wait for the actual outcome,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.