Markets fall again on weak global cues

The benchmark indices, Sensex and Nifty, fell 1.08% and 0.96% to end at 60,098.82 points and 17,938.4 points, respectively, at the end of the day’s trading. On the sectoral front, Nifty IT index fell 2.1%, followed by Nifty Fin Serve (-1%) and Nifty FMCG (-0.94%).

Gains included the Nifty PSU Bank index, which rose 2.2%, followed by Nifty Media (1%), Metal (0.8%) and Auto (0.7%). The Sensex and Nifty fell 0.9% and 1.07%, respectively, on Tuesday after a drone attack on three fuel tankers of Abu Dhabi National Oil Company (Adnok) took oil prices to a seven-year high.

On Wednesday, Western Texas Intermediate (WTI) crude futures contracts were trading at $86.39, up $1.12 from its previous close of $85.43.

“Globally, risk sentiments took a beating as bond yields rose as a result of rising inflation. Simultaneously, the ongoing geo-political tensions and spurt in oil prices dented investor confidence. Also, continuous FII selling forced the domestic market to trade in favor of the bears for the second day in a row. The UK inflation rate rose to 5.4% in November from 5.1% in December due to rising demand, rising energy costs and supply constraints, said Vinod Nair, Head of Research, Geojit Financial Services.

A rise in US Treasury yields has also emerged as a major concern for markets, and investors will keep a close eye on the US Fed’s moves to raise interest rates and ease liquidity. “The yield on the benchmark 10-year Treasury note rose 9 basis points to 1.86%, the highest since the start of the pandemic. As the Federal Reserve moves to counter the surge in inflation, investors will start selling bonds, pushing the yield higher,” said Mitul Shah, head of research at Reliance Securities. “In the past we have seen that Market volatility persists until the Fed’s announcement – after the first rate hike, it stabilizes and the flow in equities resumes,” he said.