Mkts see biggest fall since Feb 28
Correction in heavyweights drags indices down
Indian equity benchmarks fell on Monday amid declines in banking heavyweights and nervousness ahead of a dataheavy week that will release inflation data from both the US and India.
The Sensex ended the session on Monday at 73,503, a decline of 617 points or 0.8 per cent. The Nifty fell 161 points or 0.7 per cent to end at 22,333.
This was the biggest single-day fall for both the indices since February 28.
The Nifty Smallcap 100 continued to underperform, dropping 2 per cent, while the Nifty Midcap 100 fell 0.4 per cent.
HDFC Bank, which fell 1.3 per cent, was the biggest contributor to the Sensex decline. The lender's stocks declined after some analysts recently downgraded its target price, citing medium-term risks and a gradual recovery in net interest margins (NIMS).
Investors were also cautious ahead of the release of inflation data in India and the US on Tuesday.
Equity markets are riding on bets that the US Federal Reserve (Fed) is moving closely to pivot to easier monetary policy. Investors will keenly track the US inflation data as it is the major piece of economic data before the Federal Reserve's March meeting. A stronger-thananticipated number will dent market sentiment.
Meanwhile, moderation in prices will raise wagers for rate cuts. Last week, Fed Chairman Jerome Powell testified before the Senate that the US central bank is not yet ready to cut interest rates. European Central Bank (ECB) Chairman Christine Lagarde also spoke of rate cuts beginning as early as June this year.
“Continued sell-off in global markets due to uncertainty over rate cuts impacted domestic market sentiment, which is currently overbought. The stronger-thanexpected US non-farm payroll data and caution ahead of the release of US inflation data on Tuesday kept investors on the edge. The broader market continued its underperformance due to valuation concerns, while investors are rebalancing their portfolios to include haven assets like gold,” said Vinod Nair, head of research at Geojit Financial Services.
Going forward, apart from inflation data, the statements of macro policy officials and other macro data from across the globe will determine the market trajectory.
“The intermediate dip in the index after every uptick and underperformance of the broader indices are making traders’ lives difficult. We feel this may continue due to mixed trends across index majors. In the present scenario, traders should avoid aggressive longs and prefer a hedged approach,” said Ajit Mishra, senior vice-president — technical research, Religare Broking.
The market breadth was weak, with 3,095 stocks declining and 876 advancing. Apart from HDFC Bank, Reliance Industries and ICICI Bank, which fell 0.9 per cent each, were the big contributors to the Sensex decline. Telecom stocks fell the most, and its sectoral index on the BSE plummeted by 2.4 per cent.
Tata Group stocks on Monday fell amid uncertainty regarding the initial public offering (IPO) of its holding company Tata Sons. Barring three Tata firms, all other group company stocks fell, and the group’s market capitalisation (mcap) plunged by ~27,385 crore.
Tata Chemicals fell the most, down 10.6 per cent during Monday’s session. Other group stocks that went down steeply were Automobile Corporation of Goa, which fell 8.3 per cent, and Rallis India, which fell 5.1 per cent. Tata Investment Corporation and Artson Engineering fell 5 per cent each. Analysts said group stocks, with direct or indirect exposure to Tata Sons’ equity, had rallied in the past few weeks in anticipation of an IPO. However, news reports suggest that the conglomerate may not be keen on listing, triggered profit taking. Tata Sons is registered as a core investment company (CIC) with the Reserve Bank of India (RBI). It has been classified as an “upper-layer” nonbanking financial company (NBFC). This classification requires the company to follow a strict regulatory structure and list on the public market by September 2025.
“The group’s stocks are trading at slightly elevated valuations, and moreover, there is a correction in small and midcap stocks,” said Chokkalingam G, cofounder of Equinomcs.