FII selling ahead of MPC meet dents equities; banking stocks down (Roundup)

Continuous selling by FIIs ahead of the Reserve Bank of India’s MPC meet dragged India’s key equity indices — S&P BSE Sensex and NSE Nifty50 — deep in the red on Monday.

The FIIs pumped out Rs 1,157.23 crore from the BSE, NSE & MSEI in the capital market segment.

Last week, the FIIs sold more than Rs 4,000 crore. The MPC is expected to retain its key lending rates during the upcoming monetary policy review. It might do away with its accommodative stance in an indication of future rate hikes to draw out excess liquidity, thereby, staving off inflationary pressure.

Globally, Asian stock markets traded mostly higher on Monday, following the mixed cues from Wall Street on Friday. Besides, the European markets rallied at the open as a bumper US jobs report continued to boost stock market sentiment.

On the domestic front, volumes on the NSE were in line with recent averages. Amongst indices, power, oil & gas and metal gained the most, whereas consumer durables, capital goods, banks, auto, telecom, IT, healthcare and FMCG fell the most.

Consequently, the Sensex slumped by 1.75 per cent or 1,023.63 points to 57,621.19 points, while Nifty was down 1.73 per cent or 302.70 points down to 17,213.60 points.

“Nifty has given up the recent gains swiftly and creates doubt about the strength of the upward recovery. The RBI MPC meet outcome on Feb 10 could halt or accelerate this downmove,” said Deepak Jasani, Head of Retail Research, HDFC Securities.

“Over the next few sessions, Nifty could slow its speed of fall and consolidate. 17062-17410 could be the band for the Nifty in the near term.”

According to Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services: “Domestic Market has been witnessing heavy selling pressure post the Budget as the focus shifted back to interest rate, inflation, bond yields, and surging crude oil prices.”

“It is important for the market to sustain above the 17,000 levels to witness some stability in an otherwise volatile environment. The corporate earnings delivery is highly crucial and the Q3FY22 results so far has been decent providing some support to the markets.”

Vinod Nair, Head of Research at Geojit Financial Services said: “Domestic markets are volatile ahead of the state elections, witnessing a steep fall led by FII selling and weak global cues.”

“US bourses were under pressure as strong US jobs data gave rise to fears of sharper than expected Fed rate hikes, resulting in a spike in the bond yields. The volatility in the market is likely to continue due to high chances of interest rate lift-off by the RBI given domestic inflation and policy tightening by global central banks.”

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