Nifty fell 1.11%, or 247.2 points, to close at 21,951; while BSE’s Sensex declined 1.08%, or 790.3 points, to close at 72,304.
“The profit taking has been broad based amid softer global cues,” said Pankaj Pandey, head of research at ICICI Securities. “Nifty is also struggling to cross the psychological levels of 22,000 due to lack of near-term triggers.”
Nifty Midcap 150 and Nifty Smallcap 250 index declined 1.8% and 1.9%, respectively. Out of the 3,921 stocks traded on the BSE, 3,002 declined, while 844 advanced.
AgenciesSome analysts said that a major driving force for the fall is the record high open interest in index and futures. After 2008 and 2018, this is the third time that the open interest relative to index is over 18 times.”The open interest in F&O is at record high levels indicating significantly long exposure,” said Rohit Srivastava, founder, indiacharts.com. “Some profit booking took place at these levels since everyone will not roll over the positions.” As futures and options contracts of the February series are set to expire Thursday, traders uncertain about the market prospects have been liquidating their positions and not rolling them over to the March series.”After the excessively bullish phase, prolonged corrections are likely due to unwinding of positions and the cue can be taken from the number of positions rolled over.”FPIs net sold shares worth ₹1,879.23 crore on Wednesday, while their domestic counterparts were buyers to the tune of ₹1,827.45 crore.
Srivastava said that Nifty is expected at 21,000 levels in the near term.
“The markets are consolidating at higher levels which is good and expected to be at 22,700 levels by the month end,” said Pandey.
Elsewhere in Asia, Hong Kong slumped 1.51%, Taiwan ended 0.49% lower and China fell 1.91%. South Korea ended 1.04% higher and Indonesia rose 0.59%.