Markets extend correction from life-time peaks

Representational image only.
| Photo Credit: Reuters

Mumbai

Equity benchmark indices declined in early trade on July 24, extending corrections from their life-time peaks for the second consecutive session, dragged down by index heavyweight Reliance Industries after the company missed street estimates due to weak performance in oil-to-chemicals (O2C) business.

Foreign fund outflows and crude oil prices hovering above $80 per barrel also weighed on equity markets as traders were awaiting the U.S. Federal Reserve’s monetary policy decision to be announced this week.

The 30-share BSE Sensex declined 87.24 points or 0.13% to 66,597.02. The broader NSE Nifty fell 10.65 points or 0.05% to 19,734.35.

From the Sensex pack, Kotak Mahindra tanked more than 3% and Reliance tumbled close to 2% in the initial trade.

“RIL Q1 Results misses street estimates due to weak performance in oil-to-chemicals (O2C) business on account of a sharp reduction in crude oil prices and lower price realisation of downstream products,” said Prashanth Tapse, Sr. VP Research analyst at Mehta equities Limited.

JSW Steel, Tata Steel and Tech Mahindra were other laggards. On the other hand, Mahindra & Mahindra and Larsen & Toubro gained more than 1%. IndusInd Bank, Axis Bank and Tata Motors were among other gainers.

Of the 30 stocks, 18 were trading in green while on the 50-stock index Nifty, 27 were in positive territory.

“The near-term market trend will be influenced by a host of factors like the recent Q1 results, some major results expected this week and policy decisions like the Fed meeting outcome on Wednesday,” V. K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said in his market outlook.

Mr. Vijayakumar further noted that the Fed is likely to raise the rate by 25 bp on Wednesday, but the market movement will be decided by the commentary of the Fed chief regarding future inflation and rate trends. Investors may wait and watch these events unfold.

On Friday, both the indices settled more than 1% lower in the previous session, snapping their six-day record-breaking rally. The BSE benchmark tumbled 887.64 points or or 1.31% to settle at 66,684.26 on Friday. NSE Nifty fell by 234.15 points or 1.17% to end at 19,745.

In Asian markets, Nikkei 225 was up 1.38%, while the stock markets in Hong Kong and Shanghai were not trading. The U.S. markets ended broadly higher on Friday.

Global oil benchmark Brent crude was trading 0.14% lower at $80.96 a barrel. Foreign Institutional Investors (FIIs) were sellers on Friday as they sold equities worth ₹1,998.77 crore, according to exchange data.