Sensex, Nifty extend decline for straight 8th day; shares wilt on inflation worries

Mumbai: Benchmark Sensex and Nifty slid for the eighth straight day to close at four-month lows on Tuesday as growing worries over interest rate hikes to stem inflation and FII selling unnerved investors.

Mixed global cues, selling in index heavyweights and caution by investors ahead of the release of key macroeconomic data waylaid the key indices to their longest losing run in more than three-and-a-half years. Investor wealth eroded by Rs 10.58 lakh crore in the eight-day decline.

Sensex and Nifty, previously, had fallen for a record nine days on the trot in May 2019.

Paring its early gains, the BSE Sensex declined by 326.23 points or 0.55 per cent to settle at a four-month low of 58,962.12. The barometer opened higher and later touched a high of 59,483.72 in line with gains in Asian markets.

However, European stocks opened lower and US futures also declined amid a rise in bond yields which pulled down the 30-share index around 688 points to touch a low of 58,795.97.

The NSE Nifty also retreated from the day's highs to settle at a more than four-month low of 17,303.95, showing a loss of 88.75 points or 0.51 per cent. As many as 33 of Nifty stocks declined.

From the Sensex pack, Reliance Industries fell the most by 2 per cent. Tata Steel, Bajaj Finserv, ITC, NTPC, Bharti Airtel, Tech Mahindra, Titan, Axis Bank and Bajaj Finance were among the other major laggards.

Asian Paints, Mahindra & Mahindra, Power Grid, UltraTech Cement, Tata Motors and HDFC were the major gainers.

"Global investors' interest in the equity market is weakening due to the slowdown in the economy, led by high inflation and contractionary monetary policy. Inflows are being diverted to safe assets, and corporate earnings growth is dropping, affecting the performance of the stock market and demanding downgrade in valuation.

"The double whammy for India is that it is expensive compared to other EMs, resulting in underperformance among the global market," said Vinod Nair, Head of Research at Geojit Financial Services.

Analysts said that weak sentiment continued to prevail as traders wary of high inflation concerns unwound their positions in commodity stocks such as metals and oil & gas.

Investors are also cutting their long positions due to high valuations of India market compared to other markets, they added.

"The Nifty opened on a flat note and witnessed continued selling pressure throughout the day to close the day on a negative note for the eight consecutive trading session," said Jatin Gedia, Technical Research Analyst, Sharekhan by BNP Paribas.

Markets are not seeing respite despite the oversold positions however the pace of decline has subsided in the recent sessions, Ajit Mishra, VP - Technical Research, Religare Broking Ltd said.

The broader equity market, however ended higher, with the midcap gauge climbing 0.60 per cent and smallcap index gaining 0.40 per cent.

Among the sectoral indices, metal declined 2.37 per cent, oil & gas dipped 1.42 per cent, energy (1.35 per cent), teck (0.87 per cent), IT (0.83 per cent) and bankex (0.21 per cent).

Consumer discretionary, industrials, telecommunication, utilities, auto, realty and power were the gainers.

In Asian markets, South Korea, Japan, and China ended higher, while Hong Kong settled in the red.

Equity exchanges in Europe were trading mostly lower after high inflation data from the UK and France fanned fears of higher rate hikes by the European central bank.

The Ministry of Statistics and Programme Implementation will release the second advance estimate of the Gross Domestic Product for 2022-23 along with December quarter data on Tuesday evening.

International oil benchmark Brent crude advanced 0.67 per cent to USD 83 per barrel.

Foreign Portfolio Investors (FPIs) offloaded shares worth Rs 2,022.52 crore on Monday, according to exchange data.