Feeding on strong global cues, Indian stocks muscled their way to a strong start on Wednesday but the West Asian tensions proved to be a spoiler, with the benchmark indices crashing nearly 1 per cent by the end of the day.
A moderation in US treasury yields, stable crude oil prices and news of a massive Chinese fiscal stimulus failed to bring any relief rally on the stock markets as heightened global uncertainty and the geopolitical tensions in West Asia turned the tide.
The 30-share Sensex could not hold on to its 215-point gain as investors hesitated from building fresh positions amid the Israel-Palestine conflict and the ongoing results season which has been at best a mixed show.
After opening in the green at 64619.27 on news of falling US treasury yields and a Chinese stimulus through additional sovereign debt issuance, the benchmark index hit an intra-day high of 64787.08.
However, it could not sustain the gains and slipped back into the red for the fifth consecutive session.
The gauge plummeted 522.82 points or 0.81 per cent to end at 64049.06 with 24 of its components finishing with losses. It has plunged 2,379 points in the five sessions, while the Nifty declined 159.60 points to end at 19122.15.
The broader index has lost around 690 points over the same period. During these five sessions, the market cap has tanked Rs 14.60 lakh crore.
While some market experts feel that equities are in oversold territory, others are of the view that the tensions in West Asia will cap gains at least in the short term.
Among the Sensex firms, Infosys fell the most by 2.76 per cent. It was followed by Bharti Airtel, NTPC, Tata Motors, IndusInd Bank, Bajaj Finance, ICICI Bank, Tech Mahindra, Titan and Axis Bank which fell up to 1.82 per cent
Tata Steel, State Bank of India, Mahindra & Mahindra, Maruti and Nestle were the gainers rising to 1.13 per cent.
"Investor sentiment is on edge as tensions in West Asia continue to drag the market. Despite a drop in oil prices and an optimistic view of the progressing second quarter results season, investors took a cautious approach due to the expectation that a higher interest rate scenario would continue slowing future growth," Vinod Nair, head of research at Geojit Financial Services, said.
He added that a positive strategy is evident in large-cap stocks, amid growing geopolitical worries and valuation concerns in mid- and small-cap stocks.
While there are concerns about global interest rates remaining in an elevated zone for a longer period, yields on the 10-year US treasury were trading below the 4.90 per cent level at 4.88 per cent. Crude oil benchmark Brent was also stable at $88.37 a barrel.
The BSE smallcap gauge declined 0.77 per cent and the midcap index fell 0.52 per cent.
``It was a sea of red at Dalal Street which was primarily clouded by lingering concerns about corporate earnings which as of date was uninspiring and, most importantly, they could come under heavy pressure from inflation, an economic downturn, and soaring rates," Prashanth Tapse, senior VP (research), Mehta Equities, said.
