Sensex drops 398 points at open, Nifty sub-18,000; banks, realty stocks drag

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Domestic benchmark equity indices opened with a gap down on Wednesday after U.S. shares snapped their longest winning streak since 2017. Treasuries rallied, with some traders citing an unwinding of bearish bond bets. At open, Sensex declined 421 points or 0.70% to 60,011, while Nifty stood at 17,918, down 125 points or 0.70%.

“Even though the market appears resilient, the bulls are facing major headwinds in the form of sustained selling by FIIs. The ‘buy on dips’ strategy of retail investors and DIIs is countered with the ‘sell on rally’ strategy of FIIs. This tug of war between retail/DII vs FIIs is likely to continue in the short run. If the global environment for equity turns weak, accelerated selling by FIIs can trigger a minor short-term correction in the market,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Gainers & losers

Sectoral strand

Major sectoral indices on the NSE were trading in the red with Nifty Bank slipping 0.86%, followed by the Nifty Realty index losing 0.70%. While Nifty Metal, Nifty FMCG and Nifty IT indices were down anywhere between 0.30-0.65%.

On the upside, the Nifty Pharma index rose 0.28% and the Nifty Auto index was up 0.26%.

While the volatility index India VIX spiked up by 2.10% to 16.34 levels.

Broader markets

Broader markets continued their outperformance to benchmark indices as the BSE MidCap index was flat with a negative bias of 24 points or 0.09% at 26,495. On the other hand, BSE SmallCap index was trading at 29,421 up by 100 points or 0.34%.

Overall market breadth was in the favour of bulls as 1,604 shares advanced compared to 1,014 declining while 115 remaining unchanged.

Global markets

Overseas, Asian stocks are trading mixed on Wednesday trade as investors reacted to the release of Chinese inflation data for October.

China’s consumer inflation for October came in roughly in line with expectations, according to official data released Wednesday. The consumer price index for October rose 1.5% from last year. Producer prices, however, rose more than expected. The producer price index for October surged 13.5% from last year.

Wall Street closed lower on Tuesday as profit-taking and worries over ongoing inflation fueled a broad sell-off.

U.S. inflation data for October is also set to be released later Wednesday stateside.