Indian stocks fell after technical indicators came close to flashing a warning sign amid the longest weekly winning streak since November.
The S&P BSE Sensex declined 0.4% to 36,594.33, with the NSE Nifty 50 Index doing the same. Both gauges’ relative strength and 200-day moving averages are close to levels triggering sell signals, after a fourth straight week of gains.
“Valuations can’t be justified by any metric now,” said Amit Khurana, head of research at Dolat Capital Ltd in Mumbai.
“We believe the market is little stretched in the short term and expect a very limited upside. A break below 10600 will significantly dent the strength of the bulls,” said Jimeet Modi, founder & CEO, SAMCO Securities & StockNote.
As India’s corporate earnings season commences, the country faces its first economic contraction in 40 years even as signs of recovery emerge with business gradually reopening. Still, the South Asian nation is the third-worst hit by the coronavirus, after the US and Brazil.
Tata Consultancy Services Ltd. gained 0.8% despite posting profit below expectations after the pandemic disrupted its ability to service key clients.
Asia’s largest software outsourcing provider is the first of India’s giant IT services companies to report earnings for the three months through June. Wipro Ltd and Infosys Ltd are scheduled to post results on Tuesday and Wednesday, respectively.
The yield on the benchmark 10-year government bond slipped two basis points to 5.76%, while the rupee depreciated 0.3% to 75.2050 per US dollar at the end of its worst week in three months.
Eleven of 19 sector sub-indexes compiled by BSE Ltd slipped, led by a gauge of banks. Twenty-one Sensex shares fell while nine rose.
HDFC Ltd contributed the most to the index decline, slipping 2.9%, Axis Bank Ltd had the largest fall, dropping 3.1%; Reliance Industries Ltd provided the biggest boost and had the largest gain, rising 3%.
Meanwhile the Indian rupee weakened by 21 paise to close at 75.20 against the US dollar yesterday, tracking lower equities as investors seemed moving away from riskier assets amid worries over mounting Covid-19 cases. Further, the stronger US dollar against key rival currencies also put pressure on the domestic unit.
The dollar index, which measures the American currency’s strength against a basket of major currencies, was at 96.7910, up 0.09%.
At the interbank foreign exchange market, the rupee opened weaker at 75.16 a dollar against the previous day’s close of 74.99.
During the session, it swung between a high of 75.12 and low of 75.33 before settling at 75.20, showing a loss of 21 paise.
On a weekly basis, the rupee logged a loss of 54 paise.
“The USD/INR spot respected the crucial support of 74.50 and bounced towards 75.30 zone mainly on coronavirus concerns and RBI intervention,” Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services, said.
Also, the fear that renewed lockdown may derail economic recovery all over the world led traders seek shelter of gold, which is a safe-haven asset, he added.
Global crude oil benchmark Brent Futures fell 1.79% to $41.59 per barrel.
Meanwhile, India saw yet another record single-day jump of 26,506 Covid-19 cases pushing its tally to 7,93,802 yesterday.
The death toll climbed to 21,604, according to health ministry data.
The Bombay Stock Exchange building in Mumbai. The Sensex closed down 0.4% to 36,594.33 points yesterday.
