 "BSE, stock market")
Profit booking in index heavyweight Reliance Industries (RIL) and a sharp decline in financial stocks pulled down the indices on Tuesday, a day after posting the best gains in eight weeks.
The 30-share BSE Sensex ended the session at 71,140, declining 802 points, or 1.1 per cent, while the blue-chip Nifty 50 index fell 215 points, or 0.9 per cent, to end the session at 21,522.
Shares of RIL, the country’s most valuable firm, fell 2.8 per cent and made a 246-point contribution to the Sensex decline.
Analysts attributed the fall to profit-taking after Monday’s 7 per cent gain.
On Monday, RIL hit an all-time high, amid reports that the company will benefit from the ongoing crisis in the Red Sea.
RIL is the biggest purchaser of Russian crude, which is largely unaffected by the tensions in the Red Sea. The stock also benefitted from reports that Walt Disney's India unit is valued at less than half the initial price. It is in talks with Disney to buy its India unit.
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The decline in the share prices of ITC, Bajaj Finance, Larsen and Toubro, and HDFC Bank also contributed to the markets’ decline.
Bajaj Finance fell after it reported a smaller-than-expected rise in quarterly profit on Monday.
There was also some nervousness ahead of big events this week, including the Union Budget on Thursday and the Federal Reserve's monetary policy announcement on Wednesday. Analysts said investors will be watching for any negative surprises in the budget.
Though the Federal Reserve is expected to keep rates unchanged, investors will be keenly awaiting comments from Chair Jerome Powell after Wednesday's decision for clues on the policy outlook.
"The direction concerning rate cuts will hold importance. Overall, we expect the market to remain range-bound till the two large events (the US Fed meeting & India's Interim Budget) unfold,” said Siddhartha Khemka, head of retail research, Motilal Oswal Financial Services
Asian markets fell by declines in China amid growing pressure on policymakers to cut rates to boost the economy. The impact of the liquidation of China's Evergrande group also dented sentiments.
Apart from the budget and Fed announcement, the earnings of tech majors in the US, the Bank of England's rate decision, and a bunch of key economic data from the developed world will determine the market trajectory in the near term, said analysts.
"Investors exhibited a reversal in strategy, adopting a cautious approach in anticipation of the upcoming FOMC meeting and interim budget amid persistent concerns regarding elevated valuations and escalating tensions in West Asia. The trend weakened in EMs as liquidation orders for major Chinese real estate firms dampened the sentiment,” said Vinod Nair, head of research at Geojit Financial Services.
The market breadth was unfavourable, with 1,929 stocks declining and 1,885 advancing. All Sensex stocks, barring five, declined. Apart from RIL, ITC fell 2.7 per cent, and Bajaj Finance, which declined by 5.2 per cent, were the biggest contributors to the Sensex decline.
Overseas investors sold shares worth nearly Rs 2,000 crore, while domestic institutions were the net buyers to the tune of Rs 1,000 crore.
