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Markets extended losses as investors turned cautious and booked profits in large-cap stocks, while the slowdown of equity purchases and sale of index futures by foreign institutional investors also dampended sentiment.
At 11:50AM, the 30-share Sensex was down 91 points at 22,541 and the 50-share Nifty was down 21 points at 6,740.
Foreign Institutional Investors seems to have trimmed their purchases in Indian equities in the past two sessions with net purchases of Rs 295 crore on Friday and just Rs 77 crore on Monday, as per the provisional data released by the stock exchanges. Further, they were also sellers in index futures worth Rs 1,170 crore (Rs 238 crore on Monday and Rs 932 crore on Friday) in the previous two sessions.
After a sluggish start, the rupee firmed up against the US dollar at 60.55 compared with the previous close of 60.64. Traders expect INR to be range-bound in the session, anticipating large month-end dollar demand from oil marketing companies to be offset by corporate and foreign inflows.
Asian markets also trimmed early gains as investors turned cautious ahead of the US Fed meet and emerging crisis in Ukraine. Shanghai Composite down 0.3% and Straits Times was down 0.5%. However, Hang Seng was trading with marginal gains. The Tokyo Stock Exchange is closed for trading on account of Showa Day.
Private banks and FMCG majors contributed the most to the Sensex decline. ICICI Bank and HDFC Bank witnessed profit taking post their March quarter earnings. Both the private banking majors were down over 1% each.
Hindustan Unilever was down 2.4% after it reported weak numbers for the March quarter. HUL’s profit after tax from ordinary activities has grown a modest 6.6 per cent to Rs 832 crore in the fourth quarter, while net sales rose 8.9 per cent, year-on-year (y-o-y). Standalone sales swelled 9.7%. Clearly, business momentum has been weakening over the past six quarters and HUL’s volumes have steadily declined. In Q3, volume growth has hit a low of three per cent, as rural demand also started weakening. ITC was down 1%.
Index heavyweight Reliance Industries has also been witnessing profit taking since the past few sessions. The stock was down 0.6%.
Metal shares also witnessed profit taking tracking weakness in metal prices on the London Metal Exchange. Tata Steel was down 3% and Hindalco fell 1.4%.
Among other shares, Titagarh Wagons, Kalindee Rail Nirman, Kernex Microsystems and Hind Rectifiers have plunged by up to 9% due to profit-booking on the Bombay Stock Exchange (BSE). Most of these railway-related stocks have seen a sharp run-up in the past few trading sessions on expectations that these companies would bag orders from the new government.
In the broader market, the BSE Mid-cap index was up 0.2% and Small-cap index was up 0.4%.
Market breadth was marginally negative with 1125 losers and 1106 gainers on the BSE.
