Indices snap 3-day winning streak on weak global cues; Sensex slips 1.3%

US tech rout, Ukraine crisis hit sentiment

India’s benchmark indices declined on Thursday, snapping a three-day winning streak amid weak global cues. Downbeat earnings by global technology firms, tensions between Russia and Ukraine, and the prospect of a rate hike by the US Federal Reserve prompted investors to take profits off the table following the latest upmove.

The Sensex fell 770 points, or 1.3 per cent, to end the session at 58,788, while the Nifty closed at 17,560 with a decline of 220 points, or 1.2 per cent.

Foreign portfolio investors (FPIs) sold shares worth about Rs 1,600 crore on Thursday; their domestic counterparts, too, were net-sellers to the tune of Rs 370 crore. In the previous three trading sessions, FPIs had applied brakes on their selling, which, coupled with Budget optimism, saw the Sensex spurt 2,358 points, or 4.1 per cent. The Budget announcement of higher capital expenditure in the next financial year stoked optimism about a strong recovery in the economy and corporate earnings.

The focus, however, shifted to the latest earnings report card, with shares of Facebook's owner Meta Platforms falling sharply after missing Street estimates. The poor earnings posted by tech giants such as Meta and Spotify disappointed investors, who were hoping that strong corporate earnings would help offset the impact of monetary tightening and raging inflation. The US markets were in the red in early trade.

Equity markets have been on a sticky wicket ever since central banks across the developed world, including the US Federal Reserve, decided to hike rates to fight inflation.

“The markets are back to following global events. We got the ECB (European Central Bank) and Bank of England meetings, and we had a weak Nasdaq,” said Andrew Holland, CEO, Avendus Capital Market Alternate Strategies.

The Bank of England on Thursday raised interest rates, back-to-back for the first time since 2004, as it began the process of quantitative tightening. Meanwhile, the ECB kept rates unchanged despite a record rise in inflation.

Investors were also concerned as India's services sector activity hit a six-month low in January. Analysts said the markets were witnessing a pause in momentum as the focus shifted from the Budget to interest rates and inflation.

“Investors are awaiting the US Labour Department's non-farm payroll count due Friday. The forthcoming RBI policy meeting is also an important event to watch. The December quarter earnings have been good so far, and most of the management commentary suggests the March quarter numbers will remain strong. Overall, we remain positive on the market,” said Siddhartha Khemka, head-retail research, Motilal Oswal Financial Services.

Tensions over Ukraine continued to simmer as Russia termed the U. decision to send additional troops as a destructive step.

“The problem is we don't know who is going to blink first. At the moment I am just hoping it's just a war of words. But it's not looking great,” said Holland.

The market breadth was mixed, with 1,696 stocks declining against 1,669 advancing. The broader markets outperformed, with the Nifty Smallcap 100 Index declining 0.3 per cent and the Midcap 100 Index falling less than a per cent.

HDFC and Infosys, which fell close to 3 per cent each, were the biggest drag on the Sensex performance, accounting for nearly 300 points of losses.