Global Selloff Overshadows RBI Moves, Stocks Fall
FIIs turn net sellers for first time after 11 sessions; Sensex drops 516 points
Mumbai: Renewed selling by foreign investors sent the stock market tumbling on Tuesday as a 25-basis-point rate cut by the RBI failed to cheer sentiment andaglobalselloff sparkedfears of further gloom.
Key indices dropped over 2%, their biggest single-day fall in two months, mirroring the slump in European markets, after crude oil slipped to the lowest in a month. The Sensex dropped 516.06 points to close at 24,883.59. The Nifty slid 155.60 points to end at 7,603.20. The selloff saw 47 of the Nifty’s 50 constituents ending in the red, led by SBI, ICICI Bank, L&T, Bank of Baroda, Bharti Airtel and BHEL. Foreign institutional investors (FIIs) turned net sellers for the first time after 11 trading sessions on Tuesday, dumping shares worth almost ₹ 800 crore.
Strategists and fund managers said a 25-basis-point rate cut was factoredinandwasadisappointment for those who had bet on easing of 50 bps. “The market fall was partly because of policy as some were expecting a 50 bps cut and partly because of global markets,”saidPrabhatAwasthi, MD, India, Nomura.
Indices gained 6-7% in March partly on expectations of a rate cut. “I don’t think the RBI policy was negative for the market,” said Sunil Singhania, CIO – Equity Investments at Reliance Mutual Fund. “We have seen a very good rally over the last one month and maybe it is only a small correction...our view continues to be optimistic,” he said.
In Europe, investor sentiment took a hit as oil prices weakened on diminishing hopes of an output curb by oil producers and as German factory orders for February sank to a six-month low. Commentary from weather bodies on how the monsoon will be this year and how corporate earnings pan out will dictate the trend in the near-term. For now, 7450-7500 points should be a support for Nifty.
“...somewhere closer to 7500, Nifty could find a bottom in the very short term. Globally, if the selloff continues, then we can go down another 200-300 points,” said Piyush Garg, CIO at ICICI Securities.
AmongNiftyputoptions,highest concentration of open interest at 7500 strike indicates nearterm support at that level.