Sensex, Nifty ends 1% lower, Public sector banks shine

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Benchmark Indian equity indices extend losses for the second straight day as investors panicked in anticipation of rising inflation in the U.S., will force central banks to raise interest rates which in turn will lead to FIIs pulling out money from Indian markets. At close, the Sensex was down 471 points or 0.96% at 48690, and the broader market index Nifty 50 ended a tad below was down the 14,700-mark at 14,696 after tanking 154 points or 1.04%.

Tata Steel, Hindalco Industries, JSW Steel, IndusInd Bank and HUL were among the top losers on the Nifty. Gainers included Tata Motors, Titan Company, Maruti Suzuki, Power Grid Corp and UPL.

“Indian indices extended its losses due to concerns over hike in global interest rates and bond yield due to rising commodity prices and inflationary pressure. All major indices belled the day in negative terrain including metals while PSU banks and media stocks managed to stay afloat. International commodity prices will have to stabilize, to provide sustenance in the equity market,” said Vinod Nair, Head of Research at Geojit Financial Services.

On the sectoral front, the Nifty PSU Bank index rallied 3.24% while the Nifty Auto index ended with marginal gains of 0.19%. On the downside, the Nifty Metal index lost the most as it plummeted almost 3%, the Nifty Bank index slipped 1.28% whereas the Nifty IT & Nifty FMCG indices fell 0.96% & 0.21% respectively.

Economy: Amid a strong second COVID-19 wave, Moody’s cut India’s FY22 GDP growth forecast. The rating agency slashed the projection to 9.3% for FY22 from 13.7% forecasted earlier. It also ruled out a sovereign rating upgrade, at least for now.

However, the UN has raised India’s growth forecast to 7.5% for calendar year 2021, a 0.2% increase from its projection in January 2021. The country’s outlook for the year, remained “highly fragile”, it said. The World Economic Situation and Prospects report released on Tuesday, 11 May 2021, also projected India’s GDP to grow by 10.1% in 2022.

Global markets: Asia, bourses in Shanghai and Hong Kong ended on a positive note, while Tokyo and Seoul were in the red.

Stock exchanges in Europe were trading on a mixed note in mid-session deals.

U.S. stocks dropped on Tuesday as speculation that rising inflation pressure could prompt interest rate hikes sooner rather than later dragged on shares.