With various factors such as weakness in crude prices, soaring bad loans, lack of clarity on fiscal consolidation, causing massive selling pressure on domestic stocks by foreign investors ahead of the Budget 2016, the market on Tuesday took a bearish turn and crashed benchmark Sensex by 379 points. Registering first fall in last five sessions, many stocks - mostly bank shares - fell for the first time as foreign institutional investors sold heavily and domestic players stayed on the sidelines on the above concerns.
Market experts are of view that shifting of capital towards State-owned power major NTPC’s Rs5,030-crore share sale intensified selling pressure in broader markets while global cues turned negative following renewed weakness in crude oil. “Besides, major lenders such as State Bank of India, ICICI Bank, Axis Bank and HDFC Bank fell by up to 3.94 per cent, which helped the Sensex fall in some way or the other,” they said.
The 50-share NSE Nifty also broke below the 7,200-mark with a plunge of 125 points. “Bears peeled off last three days’ gains influenced by the drop in crude prices. In addition, investors are taking a wait and watch approach ahead of F&O expiry and the Budget,” said Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services.
Asian shares came off from a seven-week high as the oil price rally which had propped up equity markets faltered due to worries of oversupply, brokers said. Globally, Brent for April dropped 43 cents, or 1.24 per cent, to $34.26 a barrel on Tuesday.
Fund managers remained anxious ahead of the Union Budget, which is due on February 29, as they seek clarity on Government measures towards fiscal discipline. The Budget session began on Tuesday during which opposition parties plan to corner the government on JNU and other issues. The Railway Budget will be presented on Thursday, followed by the Economic Survey the next day, while the Union Budget will be unveiled by Finance Minister Arun Jaitley on Monday.
The gauge lost for much of the session due to profit-booking before ending lower by 378.61 points, or 1.59 per cent, at 23,410.18. Intra-day, it moved between 23,851.51 and 23,361.94. The markets had opened today on an almost flat note, but sell-off accelerated towards the afternoon trade.
The BSE realty index fell 2.49 per cent, PSU 2.32 per cent, oil & gas 1.87 per cent, metal 1.75 per cent and capital goods 1.70 per cent. The mid-cap and small-cap indices were no exception, which retreated 1.47 per cent and 1.25 per cent, respectively.
On Monday, US crude rose back above $30 a barrel and European benchmark Brent climbed well over $34 on hopes that the discussions to freeze output would lead to concrete action. Hong Kong’s Hang Seng index dropped 0.25 per cent while Japan’s Nikkei was down 0.37 per cent and Shanghai Composite lost 0.81 per cent.