Markets retreat as US-China trade war jitters return

Unabated capital outflows by foreign funds and lower-than-expected quarterly numbers by InterGlobe Aviation and some other companies added to the wariness among investors, brokers said.

Officials of the US and China met in Beijing to find a way forward in their trade tussle, with experts cautioning against expecting a quick resolution to the tit-for-tat tariff war between the world's two largest economies.

The 30-share Sensex shed over 73 points to finish at 35,103.14, while the broader Nifty closed 38.40 points lower at 10,679.65.

Realty, capital goods, IT, teck, infrastructure, FMCG, consumer durables, oil and gas and auto suffered as participants pulled money off the table.

After opening higher, the 30-share Sensex quickly slipped into the red largely in line with weak Asian cues and hit a low of 35,020.08 before settling at 35,103.14, still down by 73.28 points, or 0.21 per cent.

The index had risen 675.15 points in the past four sessions, spurred by sustained buying by domestic institutional investors (DIIs) and encouraging quarterly earnings by some companies.

The 50-share NSE Nifty slipped below the 10,700-mark and finished at 10,679.65 -- down 38.40 points, or 0.36 per cent. During the day, it shuttled between 10,720.60 and 10,647.45.

Meanwhile, on a net basis, foreign institutional investors (FIIs) sold shares worth Rs 525.93 crore, while DIIs bought shares to the tune of Rs 165.84 crore in yesterday's trade, provisional data showed.

"Market was volatile even after 10-year domestic bond yield slid and rupee strengthened following Fed's dovish monetary policy. The global market is trading weak as US starts trade talk with China while any escalation of trade war will dampen investor sentiment. Back home, results and upcoming state election will give near term direction," said Vinod Nair, Head of Research, Geojit Financial Services.

Wipro fell the most among the Sensex counters, plunging 1.94 per cent, followed by Kotak Mahindra Bank at 1.90 per cent. 

Other laggards were Asian Paints, L&T, HUL, Coal India, Infosys, RIL, ITC Ltd, Bharti Airtel, Tata Motors, TCS, Adani Ports, HDFC Bank, Yes Bank and Hero MotoCorp.

On the other hand, Sun Pharma, Tata Steel, NTPC, Axis Bank, ICICI Bank, IndusInd Bank, Dr Reddy's, ONGC, Power Grid, SBI and HDFC Ltd ended in the green and absorbed the overall fall to some extent.

Shares of InterGlobe Aviation, after slumping nearly 20 per cent in early deals, clawed back some lost ground to end 10.57 per cent lower after the company yesterday reported a 73 per cent plunge in profit for the March quarter.

Sectorwise, the BSE realty index lost 1.79 per cent, followed by IT (1.62 per cent), capital goods (1.60 per cent), teck (1.39 per cent), FMCG (1.14 per cent), infrastructure (1.07 per cent), oil and gas (0.59 per cent), auto (0.39 per cent), consumer durables (0.33 per cent) and power (0.21 per cent).

Metal, bankex and PSU indices managed to end higher.

The broader markets too reflected a bearish trend for the second day. The mid-cap index fell 1.16 per cent while the small-cap finished lower by 0.84 per cent.

Global shares too displayed a similar trend following overnight losses on the Wall Street after the US Federal Reserve kept its benchmark interest rate unchanged at 1.5-1.75 per cent and reiterated plans to continue raising rates gradually amid firming inflation.

In Asia, Hong Kong's Hang Seng fell 1.34 per cent, while Shanghai Composite Index went up 0.64 per cent. Some other markets were closed for a four-day holiday weekend.

European shares too were trading in the negative terrain in morning deals, with Frankfurt falling 0.31 per cent and Paris CAC 40 down 0.30 per cent. London's FTSE fell 0.09 per cent.