Benchmark indices took a break from their record-breaking run as investors resorted to profit booking amid concerns of high valuations and uncertainty over an interest rate cut by the US Federal Reserve.
The focus has now shifted to the earnings season which will begin Thursday with Tata Consultancy Services (TCS) declaring results for the first quarter ended June 30, 2024.
While the Sensex opened 129.72 points higher to touch a fresh all-time high of 80481.36, investors started taking money off the table and the gauge soon crashed 915.88 points or 1.13 per cent during intra-day trades to touch 79435.76.
It pulled back some of these losses, but still finished in the red at 79924.77 — a fall of 426.87 points or 0.53 per cent.
At the NSE, the Nifty touched a record 24461.05 during intra-day trades but could not maintain its momentum. It then tumbled 291.4 points to hit a day’s low of 24141.80. Subsequently, it took a knock of 108.75 points to end at 24324.45.
Market circles said that while investors pressed sales after the recent run-up, they are now awaiting the results season which will kick off tomorrow.
However, the expectations remain muted for sectors such as information technology and FMCG due to factors like elevated interest rates and firm inflation. The main focus is likely to be on the management commentary on the road ahead.
Experts said mixed signals from Fed chief Jerome Powell contributed to the selling. On Tuesday, Powell said that while holding interest rates too high for a longer period could affect growth, more good data on inflation would strengthen its confidence that it is moving towards the target of 2 per cent. "While the overall sentiment remains positive without signs of weakness, the market appears overbought by various measures. Therefore, we advise against aggressive long positions," Rajesh Bhosale of Angel One said.
"Defensive sectors such as FMCG and pharma have been favoured in recent sessions, and auto stocks have also shown strength. Traders should focus on these areas,’’ Bhosale said.
