India’s benchmark indexes dropped about 1% on Tuesday as the heavyweight financials and information technology stocks succumbed to likely selling by foreign investors.
The Nifty 50 slipped 1.05% to 24,683.9, while the BSE Sensex fell 1.06% to close at 81,186.44 points, dropping for the third session in a row.
They had gained about 4% last week to seven-month highs.
All 13 major sectors as well as the broader small-caps and mid-caps declined on the day.
Indian benchmark indexes drop as US downgrade hits IT stocks; broader market up on rate cut hopes
Financials and IT, where foreign portfolio investors (FPIs) have high holdings, were the biggest drags.
Financials remained under pressure through most of the day and closed 1.2% lower. IT stocks, though, rose as much as 1.4% before reversing course to end 0.5% lower.
“One of the reasons for the market’s resilience so far, even at higher valuations, was FPI buying. However, they turned sellers on Monday. We are seeing further profit booking (today),” said VK Vijayakumar, chief investment strategist at Geojit Investments.
FPIs have bought Indian shares worth more than $3 billion so far in May, but have been net sellers over the year. They sold shares worth $61.6 million on Monday after three days of net purchases.
Rising yields of longer-dated bonds in the U.S. and Japan are likely aggravating the foreign outflows, two analysts said.
Among stocks, Eternal, formerly known as Zomato, dropped 4.1%, the most on the Nifty 50, after Jefferies said the foodtech and quick commerce company could risk losing its weightage in the MSCI Global Standard index on plans to convert to an Indian-owned and controlled company.
Pfizer India jumped 11% after the drugmaker posted an 85% surge in quarterly profit, helped by a one-time gain.
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