Sensex drops 200 points on US Fed’s hawkish comments, FII selling; Nifty below 22,500

Indian equity indices opened lower on Tuesday as hawkish comments from key U.S. Federal Reserve officials weighed on investor sentiment, while sustained foreign selling ahead of the final two phases of national elections was expected to keep volatility high.

The BSE Sensex was trading 206 points or 0.28% lower at 73,812. Nifty50 was trading at 22,450, down 52 points or 0.23% at around 9.19 am.

Among the Sensex components, Nestle India, M&M, and HUL emerged as the top laggards, witnessing declines of 1-2.5%. UltraTech Cement, Axis Bank, TCS, Infosys, and Bajaj Finserv also started the session on a lower note. Conversely, Tata Steel, Power Grid, JSW Steel, Bharti Airtel, and SBI opened higher.

Volatility in Indian markets reached 22.3, the highest level since February 2022.

Barring Metal, PSU Bank and Oil & Gas, all sectoral indices opened in the red. Nifty Metal rose nearly 1%, led by SAIL, Vedanta, and Hindustan Zinc.Among individual stocks, Delhivery fell nearly 9% post Q4 results. The company reported a narrowed loss of Rs 69 crore in the fourth quarter of FY24, compared to a loss of Rs 159 crore in the year-ago quarter.Experts View
“With 5 stages in the 7-stage elections completed, the market is slowly showing signs of stability. The negative trigger of sustained FII selling also seems to be over when the FIIs turned buyers last Friday” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

“The prime minister has hinted about a sharp rally in the market after June 4th. The market is likely to move ahead before the election results since the market is smart enough to anticipate the results,” Vijayakumar added.

Deven Mehata, Research analyst at Choice Broking, said, “Nifty can find support at 22,400 followed by 22,350 and 22,300. On the higher side, 22,600 can be an immediate resistance, followed by 22,650 and 22,700.”

Global Markets
Asian peers opened lower on the day, with the MSCI Asia outside Japan shedding 0.87%. Overnight, Wall Street equities were mixed as hawkish comments from Fed officials weighed on sentiment.

FII/DII Tracker
Foreign investors have sold Indian shares worth Rs 28,242 crore in May so far, the highest in 16 months since January 2023.

Sustained foreign selling is driven by relatively high valuations in Indian equities compared to other emerging market peers like China, as well as caution ahead of national election results on June 4. However, domestic institutional investors have been net buyers in 19 of the last 20 sessions, lending stability to markets.

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