Benchmark indices were trading lower during the afternoon trade on Friday, surrendering all gains after a five-day rally, dragged by financials, FMCG, pharma and auto stocks.
The market opened on a negative note, tracking weak global cues after US Federal Reserve officials signalled that they will combat rising inflation aggressively. Indices were trading lower in the afternoon, tracking losses in heavyweights such as HDFC.
At 1 pm, the BSE Sensex was trading at 61,038.25, down 197.05 points or 0.32 per cent. It recorded an intraday high of 61,136.25 and a low of 60,757.03. The Nifty 50 was trading at 18,203.60, down 54.20 points or 0.3 per cent. It recorded an intraday high of 18,232.10 and a low of 18,119.65.
Gainers and laggards
Tata Consumer, Infosys, IOC, L&T and Adani Ports were the top gainers on the Nifty 50 while Asian Paints, Axis Bank, UPL, Nestle India and HDFC were the top laggards.
Dr VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, “Inflation is turning out to be a major worry for markets this year. December PPI inflation in the US has spiked to a record 9.7 per cent. Inflation in the Euro Zone is already at record highs. If inflationary expectations get entrenched, the Fed will have to act early, perhaps in March itself. ECB too is likely to follow suit.”
“Even though such an emerging scenario is unfavourable for equity, markets may not react negatively since the high negative real return from fixed income makes returns from equity attractive. Since retail investors are now a force to reckon with, whether in the US or India, their response to market corrections on rate hike expectations will be crucial. FIIs again moving to sell mode may act as temporary headwind for some large private banking stocks in which FIIs have large holdings. This can turn out to be a buying opportunity for long-term investors,” added Dr Vijayakumar.
India’s wholesale price index (WPI) inflation eased to 13.56 per cent in December.
According to Santosh Meena, Head of Research, Swastika Investmart, “We are seeing a pullback after a vertical rally on the back of some weakness in global markets; however, there are no such negative cues for the market.”
However, according Meena, the overall outlook of the market is bullish.
Realty in focus
On the sectoral front, a majority of indices were in the red with financials, auto, FMCG and pharma recording higher losses while realty managed to retain gains.
Nifty Bank and Nifty Financial Services were down 0.84 per cent and 0.79 per cent, respectively. Nifty Private Bank and Nifty PSU Bank were down 0.79 per cent and 0.32 per cent, respectively. Nifty Auto was down 0.59 per cent while Nifty FMCG was down 0.45 per cent. Nifty Pharma and Nifty healthcare Index were trading 0.55 per cent and 0.59 per cent lower, respectively.
Meanwhile, Nifty Realty was trading 0.72 per cent higher.
Midcaps face pressure
In the broader market, smallcaps managed to retain gains while midcaps faced pressure.
Nifty Midcap 50 was down 0.27 per cent whileNifty Smallcap 50 was up 0.34 per cent. The S&P BSE Midcap was up 0.08 per cent while the S&P BSE Smallcap was up 0.40 per cent.
The volatility index rose 0.83 per cent to 16.85.