Amid fresh sell-off, Sensex tumbles 764 points; Nifty ends below 17,200

Our Bureau | | Updated on: Dec 03, 2021
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Financials, FMCG, pharma, healthcare and oil & gas drag

After two consecutive sessions of gains, benchmark indices ended over 1 per cent lower on Friday amid profit-booking.

Market opened on a positive note amid positive global cues. However, it erased all early gains to end lower. Indices were also dragged by losses in heavyweights such as Reliance, Asian Paint, Kotak Bank and HDFC Life.

The BSE Sensex closed at 57,696.46, down 764.83 points or 1.31 per cent, near the day's low of 57,640.57. It recorded an intraday high of 58,757.09. The Nifty 50 closed at 17,196.70, down 204.95 points or 1.18 per cent. It recorded an intraday high of 17,489.80 and a low of 17,180.80.

Breadth remains positive

The market breadth, however, remained positive with 1,802 stocks advancing on the BSE as against 1,454 that have declined while 141 remained unchanged. Furthermore, 393 stocks hit the upper circuit as compared to the 211 stocks that were locked in the lower circuit. Besides, 190 stocks touched a 52-week high level and 12 touched a 52-week low.

The volatility index rose 2.03 per cent to 18.46.

UPL, BPCL, IOC, ONGC and IndusInd Bank were the top gainers on the Nifty 50 while Powergrid, Reliance, Kotak Bank, Asian Paints and HDFC Life were the top laggards.

Concerns related to the spread of the Omicron variant of the coronavirus and the impact of the same continued to weigh on investor sentiments. Investors turned cautious after India reported its first two cases of the Omicron variant of Covid-19 on Thursday.

According to Vinod Nair, Head of Research at Geojit Financial Services, "Following a positive opening, benchmark indices gave up all gains led by losses in heavyweights in anticipation of the RBI meet next week. Meanwhile, investors were also cautious after India reported Omicron cases.”

“However, global equities traded with slight gains recovering from yesterday’s broad-based sell-off led by fears on new Covid variant and Fed chair’s comment on the bond-buying program,” said Nair.

Monetary policy

Investors are now looking forward to the RBI Monetary Policy to be announced next week.

“RBI’s monetary policy meeting will be a key market driver as investors await MPC’s policy decision which is broadly expected to hold an accommodative stance considering the uncertainty surrounding the new variant,” said Nair.

According to Rajani Sinha, Chief Economist and National Director - Research, Knight Frank India,

“There was growing expectations that in the December MPC meeting, RBI would hike the reverse repo rate to narrow the corridor between repo and reverse repo rate. However, the new Covid variant Omicron has again pushed the global and Indian economy in a state of uncertainty and nervousness.

According to Sinha, there is also added uncertainty of any knee-jerk reaction of Indian and global financial markets to Fed’s monetary policy indication.

“In such a scenario, RBI in its upcoming meeting is likely to keep the rates on hold. On the growth front, while most economic indicators have surpassed pre-Covid levels, there is still a lot of slack in the economy. Hence RBI may decide to wait and watch till the next MPC meeting in February 2022,” Sinha said.

“RBI will be concerned about inflationary pressure building in the economy. Currently the upward pressure on inflation is because of high commodity prices and supply bottlenecks. However, with economic growth gathering momentum, there is threat of further demand side pressure on inflation. We can expect RBI to start hiking rates from 2022. RBI will also narrow the corridor between repo and reverse repo rate, with sharper hike in reverse repo rate. The quantum of rate hike will be dependent on how the Covid scenario pans out and its subsequent impact on economic growth in 2022,” Sinha further added.

All in red

On the sectoral front, all indices except Nifty Media closed in the red amid heavy selling pressure.

Financials, auto, FMCG, IT, pharma and oil & gas stocks witnessed increased pressure.

Nifty Financial Services, Nifty FMCG, Nifty Healthcare Index and Nifty Oil & Gas shed over 1 per cent each. Nifty Bank, Nifty Auto, Nifty IT, Nifty Pharma and Nifty Private Bank were also down nearly 1 per cent each.

Meanwhile, Nifty Media closed 1.73 per cent higher.

Broader indices

In the broader market, midcaps witnessed selling pressure while smallcaps were able to retain gains.

Nifty Midcap 50 ended flat while Nifty Smallcap 50 was up 1.01 per cent. The S&P BSE Midcap was down 0.01 per cent while the S&P BSE Smallcap was up 0.33 per cent.

Published on December 03, 2021

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