IT, metals drag Indian shares; weak business data, monsoon worries weigh
- Nifty 50 and Sensex fell 1.16% each to 23,824.10 and 76,200.68, respectively
Indian shares fell on Tuesday, dragged by heavyweight IT and metal stocks, while weak business activity data and concerns over a patchy monsoon triggered profit-booking in the broader market following a recent rally led by low oil prices.
The Nifty 50 and Sensex fell 1.16% each to 23,824.10 and 76,200.68, respectively.
Both benchmarks opened flat but slipped in afternoon trade after data showed India’s private sector growth eased to a three-month low in June. Services activity fell to a 17-month low, while manufacturing growth slowed to a three-month low.
“Soft PMI readings, combined with persistent concerns over the monsoon shortfall, have dented investor confidence and sparked profit-taking after the recent rally driven by lower crude prices and easing Middle East tensions,” said Anita Gandhi, head of institutional business at Arihant Capital Markets.
The Nifty and the Sensex had gained 4.1% and 4.4%, respectively, over the previous seven sessions, helped by lower oil prices and easing foreign outflows.
Brent crude futures fell 0.7% to $77.4 a barrel on Tuesday, and are down about 39% from the peak of $126.4 touched during the Iran war.
Fourteen of the 16 major sectors declined. Broader small-caps and mid-caps fell 0.5% and 1.1%, respectively.
IT stocks slid 2.2% after Jefferies and Morgan Stanley flagged soft demand signals following bellwether Accenture Plc’s weak outlook. Rising expectations of a potential Federal Reserve rate hike this year also weighed, given the risk to client spending in the U.S.
“This continued to keep investors from taking a clear view on the sector, even after valuations turned more attractive,” Gandhi said.
Metals index lost 3.2%, tracking weaker global metal prices, as concerns over a potential Fed rate hike weighed on demand expectations for industrial commodities.
Bucking the broader trend, pharma index jumped 0.9% after Mint reported, citing sources, that the U.S. drug regulator had approached Indian pharmaceutical companies to supply a critical cancer-treatment drug.