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Thursday, June 24, 2021

Sensex erases 400-point gains, ends 50 points down amid weak global cues, doubts over recovery pace

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NEW DELHI: Stock market bears succeeded in putting enough pressure on domestic equity indices to wipe out afternoon gains in the last hour of the trade on Tuesday. Profit booking in European markets also dented the mood on Dalal Street.

Poor macroeconomic numbers from Japan have deepened worries over economic recovery while record daily Covid-19 patient count back home has put a question mark on V-shaped recovery in India that the government claimed.

Fitch Ratings and its domestic arm India Rating slashed estimates for India’s growth to 10.5 per cent and 11.8 per cent contraction, respectively for the ongoing fiscal. The drastic downward revision for both the firms was over twice the earlier estimates of -5 per cent by Fitch and -5.3 per cent by Ind-Ra.

The 30-share pack Sensex ended the day down 51.88 points or 0.14 per cent to 38,365.35. During the day, the index wiped off nearly 400 points from the day’s high. NSE flagship Nifty closed down 37.70 points or 0.33 per cent to 11,317.35.

Market at a glance:

  • Non-retail portion of Bharat Dynamics OFS subscribes 1.4 times
  • Heavy demand for Happiest Minds IPO, subscribed 7.28 times
  • Nifty Realty, Nifty Metal fall for fourth consecutive day; Nifty IT sole sectoral gainer
  • Telcos slump; Bharti Airtel down 3%, Voda Idea 8%
  • 112 stocks at 52-week highs, many tech names among them: Adani Green, Pfizer, TCS, Tata Elxsi, HCL Tech, Dixon Tech, Infibeam, Garware Technical top scrips

“Indian indices ended lower after forming a top around noon. Weakness in the European markets (tech sector) sparked a mild selloff post noon in Indian markets. Volumes on the NSE were marginally below recent average. Midcap and smallcap indices fell more than the Nifty suggesting broader profit taking,” said Deepak Jasani, Head of Retail Research, HDFC Securities.

Volatile moves have become the mainstay of the market in the last few days. India VIX, the measure of fear and volatility in the market, has spiked to near 23 level, reflecting traders’ expectation of heightened volatility.

Investors will also look forward to commentary from European bankers on Thursday. “ECB is expected to keep policy rates steady at its meeting, there will be a fresh set of economic projections and policy strategy to digest,” said Jasani.

Among bluechip names, BPCL was the biggest gainer, up 2.75 per cent at Rs 411.20. HCL Tech, Infosys, Reliance Industries, Wipro, TCS and Tech Mahindra were among other top gainers, adding up to 2 per cent.

On the other hand, Bharti Infratel was the biggest drag on Nifty, down 8.14 per cent to Rs 212.20. Zee Entertainment, Tata Motors, Hindalco, Tata Steel, Axis Bank, Bharti Airtel and Grasim Industries were among other losers down 3-5 per cent.

Nifty snip 8Agencies

Top 5 Nifty gainers & losers

Broader market indices underperformed on Tuesday. Nifty Smallcap fell 0.96 per cent while Nifty Midcap dropped for the third day, down 1.43 per cent. Nifty 500, the broadest index on NSE, fell 0.53 per cent.

Indiabulls Housing Finance, PNB Housing Finance, L&T Infotech, Dixon Technologies, IndiaMart InterMesh and Ashoka Buildcon were among the top gainers from broader market space, up 3-9 per cent.

Vodafone Idea, Indian Hotels, Jindal Steel, Ujjivan Financial Services, PVR and Granules India were among top losers from small and midcap segment, falling in the range of 5-9 per cent.

“We’re seeing a normal correction and it is healthy for markets. The recent dip is in line with profit-taking in the global markets. Traders should focus more on risk management in the current scenario and prefer hedged trades.”

Among sectoral indices, Nifty IT was the only gainer, up 1.2 per cent as investors rushed to defensives. Nifty Media was the biggest loser, down 3 per cent, followed by Nifty Metal that dipped 2.99 per cent. Nifty Realty and Nifty Pharma were other major losers.

Market breadth was in favour of losers with 976 stocks ending in the green while 1,719 names closed with cuts. As many as 112 securities hit 52-week highs, mostly from the smallcap space. Meanwhile, 49 names hit 52-week lows, mostly from the microcap space. About 255 stocks hit upper circuit limit and 225 lower circuit limit.

Globally, European markets were trading with major cuts. London-based FTSE fell 0.50 per cent while France’s CAC and Germany’s DAX dropped over a per cent each. In the Asian markets, Singapore’s Straits Times and Thailand’s Set Composite closed in the red while others gained. Japan’s Nikkei was the biggest gainer, up 0.80 per cent.

Let’s prepare for tomorrow:

  • Border tensions: Situation on the LAC is volatile, with claims of warning fires. Traders will keep an eye on the evolving situation.
  • Global cues: Market will also track how tech stocks perform in the US, as the market will open after a holiday.
  • ECB meet: The meeting of European bankers will also be in investors mind as they will sit to outline future policy.
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