Indices plunge 1.5%, recover in last hour

Indian equities ended weak on Monday, erasing the bulk of the losses earlier in the day, as investors took worries about elevated US interest rates in their stride.

NSE’s Nifty ended at 17,241, down 73.65 points or 0.43% from the previous close. BSE‘s Sensex declined 0.34% or 200.18 points to end at 57,991.11. Both indices had dropped as much as 1.5% earlier in the day. Analysts said traders covered their bearish bets as the Nifty neared the 17,000 level.

“We saw a major recovery in the last hour of trade and the Street has been following a ‘buying on dips’ strategy for the last few sessions,” said Dharmesh Shah, head-technical research at ICICI Securities. “Nifty found support around 16,900-17,000 levels with recovery from IT and banking stocks, particularly ahead of the TCS results.”

The BSE IT index was the sole sector gainer.

While Asian indices ended weak, European stocks trimmed their losses and bounced higher. The pan-Europe index Stoxx 600 was up 0.3%.

The sell-off on Monday morning was sparked by a slump on Wall Street on Friday after data on the strong US labour market in September raised concerns that the US Federal Reserve might continue with its aggressive tightening to rein in inflation. This week, investors will watch out for the release of minutes of the Fed‘s September policy meeting on Wednesday and the September US consumer inflation report on Thursday.

“Market is keenly awaiting the data on US inflation as well as US FOMC Minutes later this week, which will give a clear direction to our markets,” Shah said.

The Nifty is expected to rise to 17,350-17,400 immediately, said Nagaraj Shetti, technical and derivatives analyst at HDFC Securities.

“We are now witnessing an upside trend reversal in the Nifty. There is strong support around 16,900-17,000 levels,” said Shetti. Losers outnumbered gainers 2,207:1,360 across categories on the BSE.

At home, foreign portfolio investors (FPIs) were net sellers to the tune of ₹2,139.02 crore, as per provisional data from the stock exchanges. Their domestic counterparts net purchased equities (in the cash segment) worth ₹2,137.46 crore, data showed.

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