The Nifty declined by 104.55 points (0.68%) to close at 15,208.9, while the Sensex tumbled by 400.34 points (0.77%) to 51,703.83.
Equity indices buckled under selling pressure for the second straight session on Wednesday as risk appetite remained subdued amid a bearish trend overseas. Profit booking was witnessed in finance, IT and FMCG counters while rising US treasury yield dampened the investor sentiment. The Nifty declined by 104.55 points (0.68%) to close at 15,208.9, while the Sensex tumbled by 400.34 points (0.77%) to 51,703.83. While private lenders such as HDFC Bank contributed to the decline, public sector banks rallied, outperforming the markets.
Nestle India was the top loser in the Sensex pack, shedding 2.80%, followed by Bajaj Finserv, Asian Paints, HDFC Bank, IndusInd Bank, Maruti, Dr Reddy’s and HDFC. HDFC twins accounted for over half of the benchmark’s losses.
The risk sentiment globally was subdued after the benchmark bond yield curve in the US rose to its highest in a decade on progress in the large fiscal stimulus package and on expectations of rising inflation. Yields on the 10-year US treasuries climbed to 1.3290%, the highest since February 27, 2020, before pulling back to 1.3023%.
Asian stocks remained jittery with the markets in Japan and South Korea declining by 0.5% and 0.93%. The benchmark in China, however, was up by 1.43%. The markets in France, the UK and Germany closed lower by 0.06% to 0.68%.
Deepak Jasani, head – retail research, HDFC Securities, said, “Asian shares were mixed on Wednesday as investors sold to lock in profits driven by hopes that economies will gradually return to a pre-pandemic normal. Rising bond yields, a sign of confidence in the economic outlook and expectations of rising inflation, are weighing on sentiment.”
On Wednesday, stocks belonging to sectors such as financials and information technology dragged the markets down. Selling in FMCG and pharmaceutical shares also dampened the sentiment. The exception to the sombre mood were PSBs, with the Nifty PSU bank rallying by 5.86% on optimism around proposed privatisation of four banks. Bank of India, Maharashtra Bank and Indian Overseas Bank gained 19.97%, 19.95%, and 19.85%, respectively.
Going forward, the markets are expected to give muted returns because of rich valuations, believe experts. According to Kotak Institutional Equities, an uptick in domestic bond yields could act as a headwind for the market. “Although manageable inflation, higher-than-expected central government revenues in FY2022 and RBI interventions may hold bond yields,” said the brokerage.
Major losers on the Nifty were Nestle India, Asian Paints, Maruti Suzuki, Bajaj Finserv, and HDFC Bank with losses of 3%, 2.62%, 2.55%, 2.54% and 2.49%, respectively. Major gainers were Hero Motocorp, BPCL, SBI, Adani Ports & SEZ and Powergrid Corporation, up by 3.51%, 2.9%, 2.75%, 2.74% and 2.13%.