The Indian stock market opened sharply lower on Monday on global cues with markets all across showing weak trends, continuing the downward trend seen in the last session on Friday.
The S&P BSE Sensex index fell as much as 490 points to touch 58,525 in the first few moments of trade after markets opened and the broader NSE Nifty50 fell as low as 17,425 points, down 204 points from its previous close.
Both the benchmark indices have recovered slightly with Sensex rising to 58,859 at 9.53 a.m. while Nifty50 trading at 17,515 points. Barring Nifty FMCG, all other sectoral indices are trading in the red with metals, PSU Banks, financial services, auto and realty indices dragging the most.
HUL was the biggest gainer in early hours of trade on Nifty50 while other stocks like ONGC, ITC, HCL were the other better performers. Tata Steel on the other hand was the biggest loser with JSW Steel, Hindalco, Adani Ports being the other weak performers.
Markets across the globe have been low while Asian markets were closed for holidays in previous week.
Profit booking, global volatility to impact stock moves
A forecast showed that sky-high valuations along with global tapering fears will impact stock market movements during the upcoming week. Market observers, pointed out high possibility of profit booking led slide on the back premium valuations and likely absence of positive domestic triggers.
Nonetheless, key indices -- S&P BSE Sensex and NSE Nifty50 -- are expected to reach new intra-day record highs of 60,000 points and 18,000-mark, respectively.
Last Friday, the Sensex closed at 59,015.89 points after making an intra-day record high of 59,700, while Nifty ended the day's trade at 17,585.15 points. It had breached the 17,790 level intra-day on last Friday.
"Broad market correction amidst high volumes gives the first hint of distribution," said Deepak Jasani, Head of Retail Research, HDFC Securities. "An adverse US Fed meet outcome next week could accelerate the correction that is typical in September, especially in the US markets."
According to Motilal Oswal Financial Services' Retail Research Head Siddhartha Khemka: "Valuations are not comfortable and hence could lead to bouts of profit booking. The weak global cues on account of worry over slower economic growth and rising Delta variant cases globally would keep market oscillating between greed and fear."
"Nervousness would be seen in the market next week ahead of Federal Reserve and ECB meeting, which could provide some indications on when the central banks will start withdrawing their monetary stimulus and start raising interest rates eventually."
Any timelines for tapering measures in the US can potentially drive FPIs (Foreign Portfolio Investors) away from emerging markets such as India.
Significantly, the recent sizeable inflow of FPI funds has been credited to have lifted the domestic markets to record high levels. In addition, Geojit Financial Services' Research Head Vinod Nair said: "In the coming week, the global focus will be on the policy meetings of a few central banks including the Fed."
"With weak US job data and inflation increasing at a slower pace, Fed is not expected to hint on taper plans in the upcoming meeting."