Sensex slips 444 points, Nifty at 17,294; metal stocks rally

For the fifth session in a row domestic benchmark equity indices opened lower as Asian stocks were trading mixed on Tuesday after Treasury yields and the dollar jumped as Jerome Powell’s renomination to head the Federal Reserve fuelled bets on quicker policy tightening. In opening trades, Sensex tanked 444 points or 0.76% to 58,021 while the Nifty was quoting at 17,294 sinking 122 points or 0.70%.

“Investors need not rush in to buy since valuations continue to be high. An important signal from the market is the sector rotation under way. While Nifty has corrected 6.4% from the peak, Nifty Bank has corrected 12.4% from the peak indicating weakness in the banking sector even though valuations are not stretched in banking. The resilience of IT in this turmoil is indication of the market preference in this rally,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Sustained selling by FIIs will continue to be a sentiment negative in the market. The retail investor response to the correction should be watched, Vijayakumar added.

Top gainers & losers

Top gainers & losers on the Sensex.

Sectoral strand

Barring the Nifty Metal index (up 0.83%) all other sectoral indices on the NSE opened lower. Nifty IT lost the most among the sectoral indices slipping 1.11% followed by Nifty Auto losing 0.73%. While Nifty Bank, Nifty Pharma, Nifty Realty and Nifty FMCG indices were down anywhere between 0.25-0.54%.

The volatility gauge India VIX spiked up further by 2.35% to 17.93 levels.

Broader markets

Mirroring losses in the benchmark indices, broader markets also opened with deep losses. BSE MidCap index plunged 214 points or 0.85% to 25,024 while the BSE SmallCap index was quoting at 27,647 lower by 298 points or 1.07%.

The market breadth also favoured the bears as 1,320 shares declined compared to 992 advancing and 107 remained unchanged.

Global markets

Overseas, Asian stocks are trading mostly lower on Tuesday as investors watched for market reaction to U.S. President Joe Biden picking Jerome Powell for a second term as Federal Reserve chair. Markets in Japan are closed on Tuesday for a holiday.

The S&P 500 ended lower and the Nasdaq tumbled deep into negative territory on Monday after both earlier hit record highs following the announcement of a second term for Federal Reserve Chair Jerome Powell. The Dow Jones Industrial Average ended slightly higher.

Biden had been under pressure to name a more progressive Democrat, rather than keep Republican Powell in the role. Powell has guided the U.S. central bank and the country’s economy through the pandemic recession, unleashing unprecedented monetary stimulus to keep financial markets afloat. His renomination now heads to the Senate for confirmation.