Sensex drops over 250 points dragged by heavy selling in banking stocks ahead of F&O expiry

  • During the day, investors can expect greater volatility in the market on the back of weekly and monthly expiration of the August F&O contracts

  • Top losers in the Sensex pack in early trade on Thursday included Yes Bank, HDFC, ICICI Bank, HCL Tech, TechM, Axis Bank, NTPC, Bajaj Finance and SBI

  • The rupee, meanwhile, depreciated 18 paise against its previous close to trade at 71.95 in early session

The BSE Sensex dropped over 269.60 points or 0.72 percent to 37,182.24 and the Nifty was 7.574 points down or 0.69 percent below the 11-mark at 10,970.35 at 10.40 AM. In early trade, the market was down 250 points in early trade dragged by heavy selling in banking stocks ahead of the expiry of August derivatives amid weak cues from other Asian markets.

After hitting a low of 37,191.79, the 30-share index was trading 215.51 points, or 0.58 percent, lower at 37,236.33 at 0930 hours, while the broader Nifty fell 58.90 points, or 0.53 percent, to 10,987.20 in early trade.

In the previous session, the BSE barometer the 30-share Sensex settled 189.43 points, or 0.50 percent, lower at 37,451.84. Similarly, the broader NSE Nifty fell 59.25 points, or 0.53 percent, to 11,046.10.

Top losers in the Sensex pack in early trade on Thursday included Yes Bank, HDFC, ICICI Bank, HCL Tech, TechM, Axis Bank, NTPC, Bajaj Finance and SBI, shedding up to 2 percent. On the other hand, Sun Pharma, Vedanta, Tata Motors, IndusInd Bank, M&M and Bharti Airtel rose up to 2.75 percent.

During the day, investors can expect greater volatility in the market on the back of weekly and monthly expiration of the August futures and options (F&O) contracts, said Shrikant Chouhan, Head Technical Research, at Kotak Securities. Foreign portfolio investors sold shares worth a net of Rs 935.27 crore on Wednesday, while domestic institutional investors purchased shares worth Rs 359.32 crore, provisional data showed.

The rupee, meanwhile, depreciated 18 paise against its previous close to trade at 71.95 in early session.

Elsewhere in Asia, bourses in Shanghai, Hong Kong, Korea and Japan were trading on a negative note in their respective late morning sessions.

Global bond yields flirted with record lows while stocks struggled to recover on Thursday, as global recession worries from intensifying US-China frictions and the specter of a no-deal Brexit drove investors to safer harbors, Reuters said.

 Sensex drops over 250 points dragged by heavy selling in banking stocks ahead of F&O expiry

Representational image. Reuters

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.38 percent, Singapore shares hit eight-month lows, while Japan’s Nikkei shed 0.44 percent.

On Wall Street, the S&P 500 gained 0.65 percent on Wednesday due in part to gains in the energy sector following a rebound in oil prices. But U.S. stock futures lost 0.4 percent in Asia.

Bond markets around the world painted a gloomier picture, with yields on 30-year US Treasuries and 10-year German bunds yield both hitting record lows - 1.905 percent and minus 0.716 percent on Wednesday.

Inversion remains a prominent feature across the U.S. yield curve, where long-dated yields are below short-dated ones, an unsettling sign as yield curve inversions have been a reliable leading indicator of future U.S. recessions.

Italy’s 10-year bond yield briefly fell below 1 percent for the first time ever. The rush to buy Italian debt, which carries higher yields than the ‘core’ euro zone countries, was in part prompted by growing hopes that a new government will soon be formed in Rome and a new election averted.

In Asia, the 10-year Japanese government bond yield dipped 1 basis point to minus 0.285 percent, just above its record low of minus 0.300 percent touched in 2016.

“Falls in global bond yields reflect growing concerns that long-term global growth is slowing down on US-China tensions and worries over subsequent global supply chain disruptions,” said Tomoo Kinoshita, global market strategist at Invesco Asset Management in Tokyo. Exchanges on Wall Street ended in the green on Wednesday.

Global oil benchmark Brent crude was trading 0.57 percent lower at 59.59 per barrel.

Gold rose 0.17 percent to $1,541.3 per ounce, near six-year highs of $1,556.1 set earlier in the week while silver extended its bull run and rose 0.85 percent to fetch $18.32 per ounce, edging near its 2017 peak.

Sharp falls in bond yields, however, have some investors worried that the recent rally in bond prices may have gone too far.

--With agency inputs

Updated Date: Aug 29, 2019 10:43:30 IST