Sensex, Nifty slide in morning trade after rally day: Here is why

This week began with Indian markets rallying impressively, with BSE Sensex soaring by 3.74 per cent (2,975 points) and NSE Nifty jumping 3.82 per cent (916 points) on Monday. However, after the opening bell on Tuesday, both benchmark indices slipped; the reason—profit-taking.

In morning trade on Tuesday, the 30-pack Sensex slipped more than 788 points and Nifty shed close to 210 points. The gains led by Sun Pharma, IndusInd Bank, Bajaj Finance, and Tata Steel were undercut by losses from Infosys, Eternal, Power Grid, Kotak Mahindra Bank, ICICI Bank, HCL Tech, Tata Consultancy Services, and Nestle in the BSE benchmark index.

In the morning, the Kospi index (South Korea), Nikkei 225 (Japan), and SSE Composite (mainland China) also gained. Only the Hang Seng index (Hong Kong) traded in the red, among major markets in Asia.

On Monday, US markets closed at a high with Nasdaq Composite jumping by 4.35 per cent and the S&P 500 gaining by 3.26 per cent.

Back in India, market watchers believe that Monday’s rally had more to do with sentiment rather than “institutional activity.” FIIs brought stocks of ₹1,246.48 crore on the day, as per information available from the exchanges.

Combined institutional buying (FII and DII) totalled only ₹2,694 crore for the day, stated V.K. Vijayakumar of Geojit Investments, reasoning that it did not cause the major Monday rally.

“This means the market surge was triggered by short-covering and HNI plus retail buying,” added Vijayakumar.

Rupee appreciates by 74 paise in early trade

The Indian currency, however, appreciated. Gaining 74 paise, the rupee reached 84.62 vs the US dollar in early Tuesday trade, as hopes of easing border tensions between India and Pakistan were rekindled. The news of the US-China trade deal added to overall optimism.

In the past few days, the US lowered its tariffs on Chinese goods to 30 per cent from 145 per cent. China reciprocated by dropping tariffs on US goods to 10 per cent from 125 per cent.

A dip in the global oil benchmark also aided the rupee, as Brent crude slipped 0.22 per cent. Brent crude, the global oil benchmark, fell 0.22 per cent to USD 64.82 per barrel in futures trade.

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