Global Sell­off Over­shad­ows RBI Moves, Stocks Fall

FIIs turn net sell­ers for first time af­ter 11 ses­sions; Sen­sex drops 516 points

The Economic Times - - Economy -

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.

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