Skittish foreign investors have turned net sellers ahead of the Budget, wiping out the gains the benchmarks clocked thus far in 2021. On Wednesday, stocks fell sharply for the fourth straight session, with the Sensex tanking 937.66 points (1.94%) to close at 47,409.93 and the Nifty50 declining 271.4 points (1.91%) to close below the 14,000 mark at 13,967.5. The markets broke their 20-day moving average.
The Indian markets underperformed the global markets which were trading mixed ahead of the US Fed meeting.
From its all-time highs, the Sensex is now down by 2,774.08 points (5.53%) in just four trading sessions. The markets are now in the red for CY 2021 with the Nifty and Sensex down by 0.1% and 0.71%, respectively. Banking and financials, metal and automobile stocks have fallen sharply.
FPIs which have been strong buyers for the last four months, including most of January, have been minor sellers in the last two sessions, offloading shares worth $74.21 million. Also, the monthly expiry led to investors booking profits on Wednesday.
Hemang Jani, head – equity strategy, broking and distribution, Motilal Oswal Financial Services, said: “Ahead of any major event, investors tend to lighten up positions. Moreover, FII flows have also slowed down which could be making other investors cautious in terms of whether there will be a trend-reversal.”
The markets are currently trading at valuations that are higher than their historical averages, which has been a cause for concern for experts who believe that most positives, including earnings recovery, economic recovery and Covid-19 vaccine, have been priced in.
Navin Kulkarni, chief investment officer, Axis Securities, said: “The Budget will be a tightrope walk for the government and negative surprises of higher taxation could impact consumption, which cannot be ruled out. Needless to say, the market has become jittery ahead of this major event.”
Stocks belonging to defensive sectors such as FMCG and IT witnessed buying on Wednesday.