Snapping their three-day record setting run, benchmark indices racked up losses Wednesday as investors scrambled to book profits amid a broad reversal in the global markets on recession fears.
After slumping over 300 points, the 30-share BSE Sensex ended 247.68 points, or 0.62 per cent, lower at 39,502.05. Likewise, the broader NSE Nifty dropped 67.65 points, or 0.57 per cent, to 11,861.10.
Both the key indices had logged record closing highs for the past three consecutive sessions following the BJP’s emphatic victory in the general elections. Traders said investors were anxious to book profits after the recent run-up, and offloaded banking, metal and auto stocks.
Global risk sentiment was at a low ebb after the 10-year US bond yields slipped below the 3-month rates — which is considered a leading indicator of a recession.
Lack of significant progress on the US-China trade talks also weighed on markets overseas, they added. Back home, SBI was the biggest loser in the Sensex pack, tumbling 3.29 per cent, followed by Tata Steel, ICICI Bank and Maruti, which shed up to 2.76 per cent.
On the other hand, Sun Pharma, TCS, HCL Tech and HUL were the top gainers, rising up to 2.41 per cent.
“Global equities continued to slide with steep rally in bonds indicating investors are turning cautious on equity markets. Investors are particularly concerned about the likely outcome of trade war on global growth. “Indian 10-year bonds yield has declined from 7.4 per cent two weeks back to 7.1 per cent now as investors are factoring in one more rate cut in RBI meet scheduled in first week of June. With contraction in US and India bond yields, some capital flight to developed world cannot be ruled out,” said Sunil Sharma, Chief Investment Officer, Sanctum Wealth Management.
Sectorally, the BSE metal, auto, bankex, power, capital goods, energy and oil and gas indices lost up to 1.97 per cent lower.
IT, teck and consumer durables finished in the green. The broader BSE mid-cap and small-cap indices followed the benchmarks, ending up to 0.83 per cent lower.
Foreign institutional investors (FIIs) net sold shares worth Rs 304.27 crore on Wednesday, while domestic institutional investors (DIIs) also offloaded equities to the tune of Rs 189.58 crore, provisional data available with stock exchanges showed.
Globally, investors rushed to safe-haven assets like US and German bonds. Additionally, the European Central Bank said a growth slump that could be caused by rising trade tensions is the biggest risk to financial stability in the eurozone.
Bourses elsewhere in Asia ended in the red, and those in Europe were also trading significantly lower in their early deals.
Meanwhile, the Indian rupee depreciated 18 paise to 69.87 against the US dollar. Brent crude, the global oil benchmark, dropped 2.16 per cent to 67.19 per barrel.