Despite accomplishing new feat in the opening trade on Tuesday, Nifty and its counterpart Sensex saw the biggest fall (in terms of points) in current calendar year. The street pressed the panic button when a sudden rush in profit-booking engulfed the market. In the mayhem that ensued, Sensex lost more than 500 points while broader markets got its share of batteringcrashed. Since the market started falling after a rather unexciting Railway Budget, experts feel the Union Budget, to be presented on July 10 may also lead to a similar crashed.
In the opening trade the Nifty had crossed 7800-mark for the first time.
The 30-share BSE Sensex fell 517.97 points or 1.98 percent to close at 25582.11 after hitting an intraday low of 25495.04 (down 605 points). The 50-share NSE Nifty plunged 163.95 points or 2.11 percent to 7623.20 after seeing day's low of 7,595.90. Meanwhile, the BSE Midcap and Smallcap indices, which rallied the most year-to-date, were down 3.6 percent and 4.2 percent, respectively.
Such correction was needed as the market had seen hefty run up from elections days till pre-Budget, say experts, adding indices had overreacted on hopes of strong Budget. According to them, positive factors from the Budget already priced in and from here on, the market will focus on inflation, April-June quarter earnings and Budget. However, they advise buying on such sharp corrections as long term is very strong for India.
Market participants should brace for another 30-40 point correction from the current level because of the sharp sentiment damage which has happened today, says Kunal Bothra, Head of Advisory, LKP.
Dilip Bhat of Prabhudas Lilladher recommends traders to avoid buying the dips and keep their commitment light until Budget is out of market's way.
According to Bhat, in the short-term, the Nifty can fall to 7,300-7,400 maximum, but it will still remain a buy on dips market.
The fall in global markets too may have dampened sentiment with the major European markets losing half a percent.
However, foreign institutional investors were net buyers amid today's big correction; they bought Rs 422.72 crore worth of equity shares while domestic institutional investors sold Rs 399.56 crore of shares, as per provisional data available with exchange.
Meanwhile, on the home turf, Railway minister DV Sadananda Gowda today presented his first Rail Budget in the Lok Sabha. The minister's speech once again highlighted the financial mess that the Indian Railways is facing.
Allowing FDI in railway, safety, modernisation, encouraging private investment, launching of high-speed trains, diamond quadrilateral project and targets to complete pending projects were the main themes of the Railway Budget.
“The Railway Minister did touch upon key aspects and has shown the intent to turnaround Indian Railways into a commercially viable and customer friendly organization but the specifics of few announcements are awaited, says Arvind Mahajan, Partner and Head of Infrastructure and Government Services, KPMG.
Railway stocks like Kalindee Rail, Stone India, Kernex Microsystems, BEML and Titagarh Wagons plunged 5 percent each due to lack of clarity on various proposals and projects. Texmaco Rail (down 20 percent) was the biggest loser among these stocks whereas CMC (up 0.5 percent), A2Z Maintenance (up 5 percent) and Moser Baer (up 4 percent) saw buying interest.
On the sectoral front, BSE Realty Index hit very badly, falling over 7 percent followed by Capital Goods, Metal, Oil & Gas, Bank and Auto indices with 2-5 percent. Healthcare and IT fell over a percent.
Shares of L&T, Reliance Industries, ICICI Bank, ONGC, State Bank of India, BHEL, NTPC, Tata Steel, Coal India, DLF and Tata Power were prominent losers among largecaps, shedding 3-8 percent. The fall in TCS and HDFC Bank was less compared other stocks, declining over a percent.
However, housing finance company HDFC and drug maker Sun Pharma bucked the trend, gaining 0.5 percent and 0.7 percent, respectively.
In the broader space, Adani Enterprises, Adani Power, Apollo Tyres, CESC, Crompton Greaves, GMR Infrastructure, IDBI Bank, IFCI, India Cements, JSW Energy, OBC, Power Finance Corporation, Reliance Infrastructure, Reliance Communications, Siemens, Unitech and Voltas plunged 5-12 percent.
Declining shares beat advancing ones by a ratio of 2230 to 770 on the BSE.
Meanwhile, the rupee recovered, appreciating by 23 paise to close at 59.78 a dollar. Brent crude (August futures) dropped below USD 110 a barrel on easing geopolitical tension, losing 0.6 percent to USD 109.58 a barrel.