The benchmark indices slid 1 per cent lower on Tuesday on weak global cues and a firm dollar, to end at its lowest in four-and-a-half months.
Most Asian markets ended in the red as well, with analysts weighing the repercussions of an aggressive trade policies under a Trump presidency. The dollar index, which was near 100 in late September neared the 106-mark, exerting pressure on emerging market currencies.
The Sensex closed at 78,675, lower by 820 points or 1.03 per cent, while the Nifty ended at 23,883, down by 257 points. The broader markets underperformed, with midcap and smallcap indices losing 1.1-1.3 per cent.
Top losers
Except realty and IT, all sectoral indices ended in the red with auto and PSU banks being the top losers.
Vinod Nair, Head of Research, Geojit Financial Services, said: “FPI-triggered selling pressure continued to impact the domestic market. The recent strengthening of the dollar, driven by aggressive ‘Trumponomics’ is adding fears. Additionally, the anticipated rise in domestic inflation, due to increasing food prices, along with depreciating INR, may influence the RBI’s monetary policy.”
FPIs sold shares worth over ₹3,000 crore on Tuesday.
Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services, said persistent FPI selling since late September along with softer-than-expected Q2 earnings has been weighing on market sentiment.
“A combination of global and domestic pressures continues to dampen investor sentiments. There are concerns over the US President-elect Donald Trump’s potential aggressive trade policies. This has led to strengthening of dollar and a fall of rupee to a fresh low today, which triggered fears of further foreign outflows,” Khemka said.
Inflationary pressure
Markets will get further cues from the domestic CPI and industrial production data, with stock specific action based on remaining Q2 numbers to be announced this week.
Among Asian peers, Taiwan and Hang Seng indices slid the most, down more than 2 per cent. European indices were trading deep in the red as well.