Mumbai: Equity benchmark indices Sensex and Nifty dropped in early trade on Tuesday, a day after recording a sharp rally, amid the emergence of profit-taking. The 30-share BSE benchmark gauge Sensex, declined by 497.5 points to 81,932.40 in early trade. The NSE Nifty dropped 117.2 points to 24,807.50. Later, the BSE benchmark index quoted 788.62 points down at 81,641.28, and the Nifty traded with a cut of 209.90 points at 24,714.80.
From the Sensex firms, Infosys, Eternal, Power Grid, Kotak Mahindra Bank, ICICI Bank, HCL Tech, Tata Consultancy Services and Nestle were among the major laggards. Sun Pharma, IndusInd Bank, Bajaj Finance and Tata Steel were the gainers. In Asian markets, South Korea's Kospi, Japan's Nikkei 225 index and Shanghai's SSE Composite index were trading in the positive territory while Hong Kong's Hang Seng quoted lower. US markets ended significantly higher on Monday. The Nasdaq Composite surged 4.35 per cent, S&P 500 jumped 3.26 per cent and Dow Jones Industrial Average climbed 2.81 per cent. "It is important to understand that the sharp 916-point surge in Nifty was not caused by institutional activity. The combined FII and DII buying yesterday was only Rs 2,694 crore. This means the market surge was triggered by short-covering and HNI plus retail buying," VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said.
The agreement between the US and China to reduce tariffs for 90 days signals the possibility of the end of the trade war between the US and China, he said. "This augurs well for the global economy," Vijayakumar added. Global oil benchmark Brent crude dipped 0.23 per cent to USD 64.81 a barrel. Foreign Institutional Investors (FIIs) bought equities worth Rs 1,246.48 crore on Monday after a day's breather, according to exchange data. Benchmark indices recorded their biggest single-day gains in absolute terms on Monday, skyrocketing nearly 4 per cent, after India and Pakistan reached an understanding to stop military actions and the US and China announced a deal to lower tariffs significantly. The 30-share BSE Sensex jumped 2,975.43 points or 3.74 per cent to settle at a more than seven-month high of 82,429.90 on Monday. The 50-issue Nifty of NSE skyrocketed 916.70 points or 3.82 per cent to close at 24,924.70.