Indian stocks retreated on Tuesday as Indian Army disclosed attack on Pakistani posts. The BSE Sensex tumbled 206 points, or 0.67%, to close at 30365.25 halting a two-day rally led by a decline in shares of drugmakers.
The Nifty closed below the 9,400-mark at 9386.15, slipping 52.10 points, or 0.55%.
Pessimism hovered over Dalal Street as 2,115 stocks closed lower, 605 finished higher while 158 ruled steady. The total turnover on BSE fell by Rs 4,160.66 crore.
Pharma stocks came under pressure with counters suffering massive selling. Shares of drugmakers plummeted up to 6%. Aurobindo Pharma fell 5.94%, Sun Pharma 4.33% while Cipla dropped 4.89%. Biocon, Neuland Lab, Vivimed Labs, Wockhardt, Cadila Healthcare and Torrent Pharma were among other losers in the pharma space. Experts attribute the poor performance to dismal earnings, high price erosion on US portfolios and absence of any new drug launches.
“Pharma continued to taste bitterness in earnings due to high competition which is impacting the sentiment of the sector for the long-term,” said Vinod Nair, head of research, Geojit Financial Services Ltd.
Sentiment lost steam owing to the sudden hike in Indo-Pak tension that spooked investors. Additionally, higher-than-expected goods and services tax (GST) rate, mainly for consumer-oriented durables, took a toll on the market, say experts.
In addition to profit taking, volatile global cues in the aftermath of a terror attack in the UK amid other geopolitical woes, also dragged indices down.
Adani Ports was the worst performer in the Sensex pack plunging 6.19% to Rs 332.05, along with Special Economic Zone Ltd., down 6.3% after a report on the company’s agreement to build a port in Kerala didn’t favour the state.
However, auto was the sole gainer, rising 0.43%. Shares of Maruti surged 2.70%, Mahindra and Mahindra went up 1.71% and Hero Motocorp moved up 0.58%. Shares of Wipro climbed 1.15% followed by Tata Steel which edged up 0.78%.
Grim cues from across the globe after minimum 22 people were killed and 59 injured when a suicide bomber blew himself up in Manchester, UK. Indian Army carrying out fire assaults on Pakistani posts across the Line of Control (LoC) added to pessimism propelling profit booking. Additionally, investors were also cautious ahead of May series derivative contracts expiry on Thursday.
Any kind of geopolitical tension irrespective of its magnitude always wears down sentiment, and the Indian equity market has just found one more reason to correct amid a healthy rally this year. However, deep plunges are unlikely on the back of liquidity abundance, experts believe.
Market momentum also lost pace on the back of sustained foreign capital outflows. Overseas investors sold shares net Rs 321.17 crore in Monday’s trade, as per the provisional figures issued by bourses.
...& ANALYSIS
- Aurobindo Pharma dipped 5.94%, Sun Pharma was down 4.33%, among others
- The poor performance is on weak earnings, price erosion on US portfolio
- Investors watched their step on sudden hike in Indo-Pak tension
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“Pharma continued to taste bitterness in earnings due to high competition which is impacting the sentiment of the sector for the long-term,” said Vinod Nair, head of research, Geojit Financial Services Ltd.
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