Domestic equity indices came under pressure, falling over 1 per cent on Monday amid growing tensions over the ongoing Israel-Hamas war and worries over more rate hikes by the US Federal Reserve. The 30-share BSE Sensex closed at 64,571.88, down 825.74 points, or 1.26 per cent, and the NSE’s Nifty 50 slipped 260.9 points, or 1.34 per cent to end at 19,281.75. The markets fell for the fourth consecutive day. Global equities fell as the 10-year US Treasury surged to 5 per cent. “Benchmark indices witnessed severe pounding in the last hour trades as simmering geo-political tension in the Middle-East region triggered a wave of selling pressure and prompted investors to offload equity holdings. Investors are already worried about further interest rate hike and inflation, and with the addition of the Israel-Hamas conflict, the uncertainty has increased further and leading to weak sentiment in global equities,” said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd. Despite the healthy performance of private banks and marginal reductions in oil prices, investor confidence remained pessimistic, and a widespread consolidation persisted in the domestic markets, said Vinod Nair, Head of Research at Geojit Financial Services. “The global markets echoed the same trend, as the unrest in West Asia has the potential to spiral further. Increased apprehensions surrounding prolonged elevated interest rates fuelled a continued upward movement in the US 10-year yield,” he said. “Fed survey on financial stability highlighted the following concerns amongst the respondents: likelihood of higher rates for a longer period on account of inflation and probability of losses in commercial real estate market,” Bank of Baroda Economist Jahnavi Prabhakar said in a note. Additionally, there were also concerns around economic weakness in China, she said. Amid worries over moderation in growth on account of elevated interest rates and higher energy prices, heightened risk aversion was witnessed in the Indian mid- and small-cap space, banks, metals, and energy stocks. The top gainers on the NSE were Mahindra & Mahindra and Bajaj Finance. Among the NSE companies that lost the most included LTIMindtree Ltd, Adani Enterprises, Hindalco Industries, JSW Steel and Adani Ports. “The short-term trend of Nifty continues to be negative. Having moved below the support of 19330, one may expect the Nifty to slide down to 18825 levels-200 day EMA (exponential moving average) in the near term. Any attempt of upside bounce could encounter resistance around 19400 levels,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities. On Monday, foreign institutional investors (FIIs) net bought Rs 252.25 crore of domestic shares, according to the BSE’s provisional data. “We expect the market to remain volatile amid rise in global uncertainties while the stock specific action is likely to continue in the market amid a busy results season. Investors are advised to shift focus towards large-cap where valuations are comparatively comfortable,” said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd. Markets will be closed on Tuesday for Dussehra.
