Benchmark indices closed lower for the third consecutive session on Wednesday amid volatility. Market started off on a positive note, amid mixed global cues and turned volatile in the first half. Indices extended losses during closing hours, dragged by financials and auto, tracking losses in heavyweights such as the HDFC Bank and HDFC.

The BSE Sensex closed at 58,338.93, down 237.44 points or 0.41 per cent. It recorded an intraday high of 59,003.82 and a low of 58,291.23. The Nifty 50 closed at 17,475.65, down 54.65 points or 0.31 per cent. It recorded an intraday high of 17,663.65 and a low of 17,457.40.

Breadth turns positive

The market breadth turned positive with 1,852 stocks advancing on the BSE as against 1,542 that declined, while 135 remained unchanged. Furthermore, eight stocks hit the upper circuit as compared to three stocks that were locked in the lower circuit. Besides, 194 stocks touched their respective 52-week highs, while 14 touched their 52-week lows.

ONGC, Apollo Hospitals, UPL, ITC and Sun Pharma were the top gainers on the Nifty 50, while Maruti, HDFC, HDFC Bank, Dr Reddy and Tata Motors were the top losers.

Market witnessed volatility ahead of holidays. Market will remain closed on Thursday and Friday. 

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd, said, “Domestic equity markets witnessed some profit booking in a curtailed trading week. Market participants are likely cautious given sustained high inflation and tightening monetary policy globally.”

US March inflation stood at a four decade high. In India, too, March 2022 CPI inflation surged to 6.95 per cent. 

“Persistence of high commodity prices amid supply-chain disruptions and resurgence in Covid cases globally will likely weigh on the inflation trajectory. Factors like volatility in commodity prices, Q4FY22 results coupled with management commentary, persistent high inflation, rising bond yields and central bank measures on rate hikes will weigh on market sentiments in the near term,” said Chouhan.

S. Hariharan, Head- Sales Trading, Emkay Global Financial Services said, “The impact of high commodity prices have started showing up in CPI inflation prints and forced RBI’s hand to reduce accommodation and open up a path for higher rates starting from June. Tighter financial conditions are unfavourable for valuations of mid and small caps and the outlook favours defensive posturing for portfolios.”

“IT stocks have been seeing meaningful short build-up going into results despite expectations of strong numbers as well as demand commentary — fears of a US slowdown are serving to dampen valuation across all IT stocks, especially so in mid-cap IT space. Banks are expected to post strong numbers for the quarter — higher inflation initially aids credit growth and this is expected to show up in robust NII growth as well as NIMs. Foreign flows are expected to remain subdued on account of tightening global liquidity conditions and hence, FPI flow is likely to be negative in the short term,” said Hariharan.

Oil & Gas, metals, FMCG, healthcare in focus

On the sectoral front, while financials (barring PSU Bank), realty and auto dragged, metals and oil and gas gained.

Nifty Oil & Gas was up 0.73 per cent, while Nifty Metal was up 0.57 per cent. Nifty FMCG was up 0.69 per cent while Nifty Healthcare Index was up 0.49 per cent.

Meanwhile, Nifty Bank was down 0.75 per cent. Nifty Private Bank and Nifty Financial Services were down 0.97 per cent each. Nifty Auto was down 0.84 per cent. Nifty Realty closed 0.54 per cent lower.

Midcaps under pressure

In the broader market, midcaps faced pressure, while smallcaps managed to retain gains, outperforming the benchmarks.

Nifty Midcap 50 was down 0.14 per cent, while Nifty Smallcap 50 was up 0.43 per cent. The S&P BSE Midcap was down 0.21 per cent while the S&P BSE Smallcap was up 0.27 per cent.

The volatility index softened 2.05 per cent to 17.79.

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