Indian equity benchmarks moved further away from record highs on Monday amid a selloff in global markets as investors awaited updates from the US central bank's policy meeting later this week. Selling pressure across most sectors led by banking, metal and automobile shares dragged Sensex and Nifty50 indices around one percent each. Gains in FMCG giants Hindustan Unilever and ITC bucked the trend, providing some support to the headline indices.
The Sensex index fell 525 points or 0.9 percent to end at 58,490.9, and the broader Nifty50 gauge settled at 17,396.9, down 188.3 points or 1.1 percent from its previous close.
In the Nifty50 universe, Tata Steel, JSW Steel, Hindalco, UPL, Bharat Petroleum, SBI, IndusInd Bank and Tata Motors, closing between 3.5 percent and 10 percent lower, were the worst hit among the 43 laggards.
Hindustan Unilever was the biggest gainer, ending 2.9 percent higher. ITC rose 0.8 percent. Bajaj Finserv, Nestle and HCL Tech closing between 0.6 percent and 1.1 percent higher, were among other gainers. (Stocks that moved the most)
Investors will closely watch the US central bank's take on its pandemic era stimulus measures on Wednesday at the end of a scheduled two-day meeting.
"Global markets traded negatively as investors were cautious ahead of multiple central bank policy meetings scheduled this week. However, due to weak US job data and inflation increasing at a slower pace, the Fed is not expected to hint on taper plans in the upcoming meeting," said Vinod Nair, Head of Research at Geojit Financial Services.
Broader markets suffered deeper losses than headline indices, as the Nifty Midcap 100 and Smallcap 100 gauges dropped around two percent each.
Jindal Steel, SAIL, Indiabulls Housing Finance, Nalco and Rain Industries -- falling between 6.2 percent and 9.7 percent -- were the biggest losers. Indian Hotels, GMR Infra, Tata Elxsi, Gujarat Narmada and KEC -- up 4.1-7.9 percent -- were among the top gainers in the indices.
Metal stocks tumbled as a nearly 10 percent fall in Tata Steel led the basket lower. Futures for steel making raw materials dropped on Friday as China, the world's top steelmaker, indicated it could expand strict air pollution controls to more cities. The Nifty Metal index closed 6.6 percent lower -- its worst day since May 2020.
NSE's India VIX index -- which gauges the expectation of volatility in the market -- spiked 14.8 percent to 17.5, marking its biggest single-day jump since June 14.
AK Prabhakar, Head of Research at IDBI Capital Markets, expects more volatility in the coming days ahead of the Fed event, which is causing nervousness among global investors.
Overall market breadth was sharply negative with an advance-decline ratio of 1:2, as 1,041 stocks rose and 2,332 fell on BSE. A total of 406 stocks in the bourse's broadest index closed lower.
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Meanwhile, European markets plummeted to a nearly two-month low following Asian equities, as investors feared major central banks will signal tapering of their pandemic-era stimulus programmes after deliberations scheduled for this week. The pan-European STOXX 600 index fell 1.4 percent.
S&P 500 E-Mini futures were down 1.3 percent at the last count, suggesting a gap-down start ahead on Wall Street.