Profit bookings as well as outflow of foreign funds dragged India's key equity indices -- S&P BSE Sensex and NSE Nifty50 -- into the red on Wednesday. Besides, high crude oil prices along with fears of a domestic key lending rate hike has raised concerns among investors.
The FIIs were net sellers on BSE, NSE & MSEI in the capital market segment. They sold Rs 1,890.96 crore worth of equities. Globally, Asian shares rallied on Wednesday as fears of a Russian invasion of Ukraine dissipated after Moscow indicated it was returning some troops to base in an apparent de-escalation, delivering investors a measure of relief.
In Europe, stocks rose as traders weighed the prospect of diminishing tension over Ukraine and the impact of rising inflation on central bank policies and after US president Joe Biden said there was still "room for diplomacy" to resolve the Ukraine crisis.
On the domestic front, volumes on the NSE were below recent average.
Amongst sectors, realty and telecom indices gained the most whereas metals, capital goods and banks fell the most.
Sensex ended the day's trade at 57,996.68 points, down 0.25 per cent or 145.37 points. Similarly, Nifty closed the trade at 17,322.20 points, down 0.17 per cent or 30.25 points.
"Nifty was the only regional index to end in the negative. Nifty ran into selling pressure at higher levels on a day when most other Asian indices were doing well," said Deepak Jasani, Head of Retail Research, HDFC Securities.
"High crude oil prices, outcome of state elections and fears of rate hikes in India are raising concerns among FPIs who are choosing to take advantage of rallies to lighten their position."
According to Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services: "Indian Markets kept dancing to the tunes of global news flows from Ukraine. After initial fall, markets witnessed a sharp pull back in the noon as media reported de-escalation of tensions between Russia and Ukraine."
"However the market turned negative once again after a warning from NATO saying that Russia is continuing military build-up around Ukraine. This increase in volatility is likely to remain in the near term as the market continues to focus on the geo-political developments around Russia and Ukraine. Other major factors like inflation and interest rates too continue to dominate the Global narrative."
In addition, Vinod Nair, Head of Research at Geojit Financial Services said: "Indian equities staged a rebound to recoup most of its losses in the mid-noon session on the back of de-escalating tensions along the Russia-Ukraine border."
"However, falling western markets prompted a quick sell-off during closing hours. In yet another blow to global inflationary pressure, UK's inflation jumped to 5.5 per cent in January recording a 30 year high, putting pressure on the Bank of England for a further rate hike sooner than later."
Source : IANS