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Benchmark indices declined for the fifth consecutive session on Thursday as concerns about restrictive monetary policy and the election outcome continued to worry investors.
The S&P BSE Sensex ended the session at 73,886, with a decline of 617 points, or 0.8 per cent.
The National Stock Exchange Nifty ended the session at 22,489, a decline of 216 points, or 0.95 per cent.
The total market capitalisation of BSE-listed firms declined by Rs 4.7 trillion to Rs 410 trillion ($4.92 trillion).
For both indices, the fifth day losing streak is the longest since October 2023.
Over the past week, investors have turned jittery, withdrawing money ahead of the election results on June 4.
The lower voter turnout during the elections has raised concerns about voter fatigue and its impact on the ruling National Democratic Alliance’s winning margin. It has also stoked fears that a less-than-comfortable majority will stall the policy measures markets had priced in during the rally leading up to the elections.
Analysts said if the ruling Bharatiya Janata Party fails to garner a simple majority, it will be a shocker for the markets as it has priced in 300-plus seats for the ruling party.
Besides domestic factors, weak global cues weighed on sentiment.
Globally, investors are increasingly concerned about restrictive monetary policy, which rattled investors. The 10-year US Treasury yields rose 15 basis points in the past two sessions to their highest levels in nearly a year.
Rate-cut expectations are dwindling ahead of the release of the key US inflation gauge.
The US Personal Consumption Expenditures Price Index is expected to rise at an annual pace of 2.7 per cent in April, the same rate as in March.
Federal Reserve (Fed) officials have long stressed the need for more evidence of inflation hitting its 2 per cent target before cutting benchmark interest rates.
Meanwhile, Fed Atlanta President Raphael Bostic said he expects the US central bank to consider reducing rates towards the end of the year.
“The benchmark index is taking cues from the US market as Treasury yields continue to climb following the stickiness of global inflation, delaying the central bank’s interest rate cut policy. Meanwhile, the broader market continued the weak trend, led by profit booking, due to the feeble closing of monthly expiry owing to a lack of interest to hold short-term positions, as an exit poll is slated for the weekend,” said Vinod Nair, head of research at Geojit Financial Services.
Going forward, apart from the US inflation data, consumer income and Chinese manufacturing data will provide further cues for markets.
“The recent decline has disrupted the positive momentum, with Nifty falling below its crucial short-term moving average, the 20-Double Exponential Moving Average. A decisive break of the 22,400 level could trigger a further drop to the 22,000–22,150 zone. We suggest aligning trades accordingly and adopting a hedged approach,” said Ajit Mishra, senior vice-president of research at Religare Broking.
Foreign portfolio investors (FPI) were net sellers to the tune of Rs 3,050 crore, while domestic institutional investors bought shares worth Rs 3,433 crore. So far this month, FPIs have withdrawn about Rs 25,000 crore from the domestic markets.
More than two-thirds of Sensex stocks declined. Reliance Industries declined 1.1 per cent and was the biggest contributor to the index decline, followed by Infosys, which fell 1.8 per cent.
The advance/decline ratio remained weak with 2,733 advancing stocks and only 1,098 declining.
