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Heavy selling by foreign portfolio investors (FPIs) took a toll on India’s stock markets, which registered their worst performance in 11 months on a day when the rupee also crashed to its lowest since August 2019.
The Sensex fell 1,939 points, or 3.80 per cent, to close at 49,099. The Nifty index declined by 568 points, or 3.76 per cent, to 14,529.15. FPIs sold stocks worth ₹8,295 crore in cash, the most in a single day in several months. Domestic institutional investors (DIIs) bought shares worth ₹1,500 crore in the cash segment.
The Bank Nifty index fell 1,745 points, or 4.78 per cent, to close at 34,803.
A rise in commodity prices has fanned inflation risks, pushing bond yields higher. Reports of the US launching air-strikes in Syria also spooked global mood.
The rupee crashed by 104 paise against the US dollar to close at 73.47 versus its opening of 72.43. US Fed Chair Jerome Powell’s statement of confidence on higher bond yields gave the dollar the push.
Crude oil prices were also higher, keeping up the pressure on the rupee
The dollar index, which is a gauge of US dollar against a basket of six global currencies, advanced 0.43 per cent to 90.52 and this rattled most stock markets. When the dollar moves up, US funds sell all other assets and buy dollars.
Volatile February
February will go down as one of the most volatile months in several years, brokers said. India VIX, a gauge of market volatility, spiked by 27 per cent intra-day, to close up at 22.93 per cent.
Between February 1, the Budget announcement day, and February 16, the Bank Nifty gained 23 per cent and Nifty and Sensex 13 per cent each. But between February 16 and Friday, the benchmarks fell sharply.
Futures outstanding in Nifty and Bank Nifty rose 30 per cent and 50 per cent, respectively, and since it was happening in a falling market, experts said a large number of new short positions were initiated. Nifty futures outstanding was 1,37,88,600 units (one contract is of 75 units). For Bank Nifty, it was 21,25,250 units (single contract is of 40 units).
The fall in the broader market was, however, less severe compared to the Nifty and the Sensex. The mid- and small-cap indices were down by less than 2 per cent.
“A series of ‘lower tops and lower bottoms’ has been established and that would be a negative for the medium-term trend of the market. The Nifty/Sensex would find support at 14,300/48,000 for the coming week. If the market falls to 14,300-14350/48200 without a meaningful bounce, then it would be a buying opportunity for short-/medium-term traders/ investors,” said Shrikant Chouhan, Executive Vice-President, Equity Technical Research, Kotak Securities.
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