Markets snap 3-day winning run on profit booking, global cues

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 Sensexended 247.68 points, or 0.62 per cent, lower at 39,502.05. Likewise, thebroader 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 thepast three consecutive sessions following the BJP’s emphatic victory in thegeneral elections. Traders said investors were anxious to book profits afterthe recent run-up, and offloaded banking, metal and auto stocks.

Global risk sentiment was at a low ebb after the 10-year USbond yields slipped below the 3-month rates — which is considered a leadingindicator of a recession.

Lack of significant progress on the US-China trade talksalso weighed on markets overseas, they added. Back home, SBI was the biggestloser in the Sensex pack, tumbling 3.29 per cent, followed by Tata Steel, ICICIBank and Maruti, which shed up to 2.76 per cent.

On the other hand, Sun Pharma, TCS, HCL Tech and HUL werethe top gainers, rising up to 2.41 per cent.

“Global equities continued to slide with steep rally inbonds indicating investors are turning cautious on equity markets. Investorsare particularly concerned about the likely outcome of trade war on globalgrowth. “Indian 10-year bonds yield has declined from 7.4 per cent twoweeks back to 7.1 per cent now as investors are factoring in one more rate cutin RBI meet scheduled in first week of June. With contraction in US and Indiabond 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, capitalgoods, energy and oil and gas indices lost up to 1.97 per cent lower.

IT, teck and consumer durables finished in the green. Thebroader BSE mid-cap and small-cap indices followed the benchmarks, ending up to0.83 per cent lower.

Foreign institutional investors (FIIs) net sold shares worthRs 304.27 crore on Wednesday, while domestic institutional investors (DIIs)also offloaded equities to the tune of Rs 189.58 crore, provisional dataavailable with stock exchanges showed.

Globally, investors rushed to safe-haven assets like US andGerman bonds. Additionally, the European Central Bank said a growth slump thatcould be caused by rising trade tensions is the biggest risk to financialstability in the eurozone.

Bourses elsewhere in Asia ended in the red, and those inEurope were also trading significantly lower in their early deals.

Meanwhile, the Indian rupee depreciated 18 paise to 69.87against the US dollar.Brent crude, the global oil benchmark, dropped2.16 per cent to 67.19 per barrel.

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