Markets lost over half a percentage point in the morning session following weak global cues as disagreement continued over the US debt deal and investors squaring of positions ahead of the futures and options expiry today.
The Nifty declined 50 points, at 5,496 and the Sensex dipped 137 points, at 18,294.
Analysts said that the markets may slide further after Nifty broke the psychological support of 5,500 in the opening trades. Alex Mathews, Head of Research from Geojit BNP Paribas Financial Services said, “The markets can edge lower in the coming days due to debt concerns in the US and high inflation levels in India. The interest rate sensitive sectors may remain under pressure for some more time.”
Analysts recommend investors to wait for one or two days before investing in equities. “It is good time to accumulate stocks once the Nifty falls below 5,500,” added Mathews.
In the US, there was no sign of agreement on raising the debt ceiling, even though the August 2nd deadline drew closer, causing risk aversion for equities.
Japan's Nikkei Stock Average declined 1.1%, South Korea’s Kospi Composite lost 0.8%, Hong Kong’s Hang Seng Index was down 1% and China's Shanghai Composite index was down 0.8%.
Back in India, among individual stocks from the FMCG space, Hindustan Unilever slipped almost 1% and ITC was trading flat ahead of the June quarter results expected later today.
Information technology shares were the top losers as investors dumped these stocks after the Rupee touched 35-month high yesterday. Strengthening Rupee may erode the margins of IT companies; the BSE IT index was off 1%. HCL Technologies and Infosys were down 2% each, and Wipro slipped 1.3%.
Rate sensitive realty stocks posted losses in the morning session as 50 bps rate hike may dent demand for new homes. The BSE Realty index fell over 1%. Orbit Corporation, Sobha Developers and Peninsula Land declined 2% each.
From the broader markets, midcap index was down 0.4% and smallcap index was off 0.1%.
Top losers on the Sensex were Sterlite, Infosys and Hindalco, down almost 2% each. Maruti Suzuki, Bharti Airtel and BHEL were the only stocks which were trading in the green, up 0.3-08%.
Market breadth was positive, 475 stocks advanced for 977 stocks which declined
