Domestic share markets fell on Wednesday to halt a record run in the S&P BSE Sensex which lasted for 10 days in a row, as investors weighed the prospect of COVID-19 vaccines against additional stimulus in major economies. Both indices registered new all-time highs in the first half of the session before succumbing to losses. The 30-scrip index shed 752.52 points from its record high to hit 47,864.14 on the downside, and the broader NSE Nifty 50 benchmark shed 204.25 points to 14,039.90 at the weakest level of the day. Gains across financial, energy and metal shares were offset by losses in IT, consumer goods and pharmaceutical shares.
The Sensex ended 263.72 points, or 0.54 per cent, lower at 48,174.06 and the Nifty settled at 14,146.25, down 53.25 points, or 0.38 per cent, from its previous close. The Sensex and Nifty clocked lifetime highs of 48,616.66 and 14,244.15 respectively during the session.
ITC, Reliance Industries, Axis Bank, Bajaj Finance, HCL Tech, Hindustan Unilever and Tata Consultancy Services, closing with losses of between 1.30 per cent and 2.98 per cent, were the worst hit among 27 laggards in the Nifty basket of 50 shares.
On the other hand, Power Grid, Hindalco, GAIL, Shree Cement, Bharti Airtel and Grasim, finishing the day with gains of 2.36 per cent and 4.39 per cent, were the top gainers in the index.
Reliance Industries, ITC and Infosys were the biggest drags on Sensex, whereas ICICI Bank and Bharti Airtel were the strongest supports.
"The market is experiencing volatility due to weak Asian market and profit-booking owing to rich valuations. Banking stocks are supportive, led by good loan growth data for the October-December period announced by key private banks," Vinod Nair, head of research at Kochi-based Geojit Financial Services, told NDTV.
HDFC Bank shares gave up initial gains to end 0.43 per cent lower at Rs 1,420.10 apiece on the BSE, a day after the mortgage lender said its loans grew around 16 per cent annually, and 4 per cent sequentially, at the end of December 2020.
Analysts say concerns about recovery from the pandemic-caused slowdown also hurt investor sentiment, a day after after the World Bank said India's economy is estimated to contract 9.6 per cent in the current financial year.
The World Bank's projection for India reflected a sharp drop in household spending and private investment, with the economy expected to expand 5.4 per cent in 2021. In its Global Economic Prospects report, the World Bank said that the informal sector — which accounts for four-fifths of employment — has been subject to severe income losses during the COVID-19 pandemic.
"In the near-term, trend of the broad market will depend a lot on foreign institutional investor (FII) inflows while stock-specific action will be based on Q3 results," Mr Nair added.
Foreign institutional investors net purchased Indian equities worth $623.84 million or Rs 4,555.48 crore crore in the first three days of the new year, exchange data shows. FIIs had taken a breather due to holidays at the end of December, which was a third straight month of net inflows.
In the October-December period, FIIs had net infused Rs 1.56 lakh crore into Indian capital markets, their best quarter since at least 2002.
Meanwhile, global stock prices slipped on Wednesday as investors prepared for a possible Democrat triumph in Senate runoffs in the US battleground state of Georgia, which would pave the way for President-elect Joe Biden to push through higher corporate taxes and greater regulation. MSCI's index of Asian-Pacific excluding Japan erased earlier gains to stand almost flat, while Japan's Nikkei 225 benchmark declined 0.40 per cent.
"Control of Senate by Democrats is likely to result in reversal of lower tax rates in the US, which may create certain volatility in the market... Going ahead, global cues will be watched closely. Rising COVID-19 cases in the UK and the EU can turn a spoilsport with increasing lockdowns going forward," Siddhartha Khemka, head of retail research at Mumbai-based Motilal Oswal Financial Services.
"Q3 results and Union Budget will be some of key events to watch for the Indian market," he added.
Tata Consultancy Services (TCS) — the country's largest IT services firm — will kick off the corporate earnings season by reporting its financial results for the October-December period on Friday.
European shares tracked a rebound in Wall Street shares overnight, with the benchmark Eurostoxx 50 benchmark index trading 0.97 per cent higher at the last count. The United Kingdom's FTSE 100 index was up 2.49 per cent, while France's CAC 40 and Germany's DAX 30 indices were up 0.78 per cent and 0.91 per cent respectively.
Along with their narrow majority in the House of Representatives, a 'blue sweep' of Congress could usher in larger fiscal stimulus and pave the way for President-elect Joe Biden to push through greater corporate regulation and higher taxes.
Democrat candidates took early leads in the twin Georgia Senate races, though the outcome may remain in doubt for days if the margins are razor-thin.
The E-Mini S&P 500 futures fell 0.43 per cent, indicating a negative start for Wall Street on Wednesday, on fears Democrats could pursue tighter regulations on big tech firms.
(With inputs from Reuters)