Sensex closes 778 points lower, Nifty ends below 16,700

Benchmark indices closed over 1 per cent lower on Wednesday.

Market opened on a negative note, tracking sell-off in global markets amid escalating tensions between Russia and Ukraine. Indices remained volatile through the day, extending losses. Indices, though recovering from the day’s low, closed lower, dragged by financials, auto and pharma stocks.

The BSE Sensex closed at 55,468.90, down 778.38 points or 1.38 per cent. It recorded an intraday high of 55,755.09 and a low of 55,020.10. The Nifty 50 closed at 16,605.95, down 187.95 points or 1.12 per cent. It recorded an intraday high of 16,678.50 and a low of 16,478.65.

Market breadth

In terms of the market breadth, almost as many stocks that advanced were declined. 1,692 stocks advanced compared to 1,652 that were declined while 114 remained unchanged. 

Another 313 stocks hit an upper circuit and 224 were locked in the lower circuit. 73 stocks were trading at their 52-week high level and 34 touched a 52-week low.

Rising crude oil prices with inflation concerns, consistent FII outflows, GDP estimates of 5.4 per cent (lower than street expectation) for Q3 and the revision of FY22 GDP lower to 8.9 per cent by the Ministry of Statistics from 9.2 per cent has impacted investor sentiments. 

Crude oil prices rose to a seven-year high with coal, iron ore, aluminium and nickel also gaining in tandem on Wednesday. Crude oil futures were up 12 per cent in the last 24 hours with Brent topping $110 a barrel and WTI up by more than 4 per cent touching $108 a barrel. 

Separately, the manufacturing sector recorded a strong performance in February as the Purchasing Managers’ Index (PMI) rose to 54.9 in February from 54 in January. However, this has not resulted in fresh job creation, rather the number has fallen.

Vinod Nair, Head of Research at Geojit Financial Services said, “The strengthening of war drowned the global market, alarming the Indian market to start with substantial weakness. The negative effect was more on large-caps in-line with weak Q3 GDP data and downgrade of FY22 growth to 8.9 per cent from 9.2 per cent, by NSO.”

“Mid & Smallcaps outperformed, in the context of the recent carnage of the broad market, making it a better pick. It makes sense to deploy the surplus cash in your portfolio in a step-by-step manner assuming stability in the future on a medium to long-term basis. The weakness subsided by the end of the day. However, volatility is expected in the near term given boiled crude price, state election outcome, and Fed policy status in the coming weeks,” said Nair. 

S. Hariharan, Head of Sales, Emkay Global Financial Services said, “The market is currently caught between many macro cross-winds – higher inflationary pressure exerted by sharp rises in commodities prices across the board (crude oil, gas, metals, agri commodities), determination on the part of DM central banks to withdraw monetary accommodation, and slowing growth impulses. As a result, earnings estimates are undergoing downward revisions for the first time in 5 quarters, while index valuation at 19x FY23e EPS is still higher than longer-term averages.”

 “FII flow environment has turned decisively negative in CY22, with net sell flow of $9 billion so far, and while DIIs have been absorbing sell flow with a similar quantum of deployment, historically, it has been seen that weak price action is followed by outflows from DIIs as well. As a result, the flow picture looks quite adverse despite the recent 10 per cent correction in Nifty. Financial Services appear weakest on account of consensus over-weight positions, while Materials names have attracted incremental inflows due to under-ownership among institutions,” Hariharan added. 

Coal India, HDFC Life, SBI Life, Tata Steel and Hindalco were the top gainers on the Nifty 50 while Maruti, Dr Reddy, Bajaj Auto, Asian Paint and Hero Motocorp were the top losers.

Metals shine

On the sectoral front, all indices except Nifty Metal, Nifty Media and Nifty Oil & Gas closed in the red. 

Nifty Metal closed over 4 per cent higher. Nifty Oil & Gas was up over 1 per cent.

Nifty Auto was down nearly 3 per cent. Nifty Bank, Nifty Financial Services and Nifty Private Bank were down over 2 per cent each. Nifty PSU Bank per cent closed over 1 per cent lower Nifty Pharma was down nearly 2 per cent Nifty Healthcare Index was down 1.5 per cent. Nifty Realty was down over 1 per cent.

Broader indices

As for broader indices, the Nifty Midcap 50 was down 0.22 per cent while Nifty Smallcap 50 was up 0.86 per cent. The S&P BSE Midcap was down 0.17 per cent while the S&P BSE Smallcap was down 0.12 per cent.

The volatility index rose 2.31 per cent to 29.23.

COMMENT NOW