Benchmark indices closed flat Friday, ending the five-session rally, dragged by financials, FMCG and pharma stocks.

Market opened on a negative note, tracking weak global cues after US Federal Reserve officials signalled that they will combat rising inflation aggressively. Indices managed to recover from early losses in the later hours led by IT and consumer durables to end flat.

The BSE Sensex closed at 61,223.03, down 12.27 points or 0.02 per cent. It recorded an intraday high of 61,324.59 and a low of 60,757.03. The Nifty 50 closed at 18,255.75, down 2.05 points or 0.01 per cent. It recorded an intraday high of 18,286.95 and a low of 18,119.65.

Breadth remains positive

The market breadth, however remained positive with 2,062 stocks advancing on the BSE as against 1,345 that declined while 96 remained unchanged. Furthermore, 559 stocks hit the upper circuit as compared to the 279 stocks that were locked in the lower circuit. Besides, 370 stocks touched a 52-week high level and 12 touched a 52-week low.

Rising inflation has been a major cause of worry for investors.  S Hariharan, Head- Sales Trading, Emkay Global Financial Services said, “Strong guidance from many members of US FOMC about hiking interest rates in CY22, alongside continuing high inflation prints globally, make for an adverse flow environment for equities in general. The reaction to strong results from frontline IT names appears to point to heavy pre-positioning in the market, and might be a recurring theme for the ongoing results season – in that good results are priced in and fresh catalysts may be needed to push the ongoing rally further.”

“We anticipate strong results from frontline Banks and Metals companies and weak results from Auto, FMCG and Chemicals sectors. At an index level, we expect to see strong resistance at current levels and would anticipate a pull-back in the near-term,” Hariharan added. India’s wholesale price index (WPI) inflation eased to 13.56 per cent in December.

“We expect continuing supply side bottlenecks, raw material shortages and high commodity prices to hold the core inflation at high levels in the near term,” said Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research.

Acuité expects a further pass through of input costs in manufactured goods if demand continues to revive or additional supply chain challenges surface due to the new pandemic wave, as per Chowdhury.

Tata Consumer, IOC, TCS, Infosys and Adani Ports were the top gainers on the Nifty 50 while Asian Paints, Axis Bank, UPL, Hindustan Unilever and ONGC were the top laggards.

IT, Realty in focus

On the sectoral front, all indices except Nifty IT, Nifty Realty and Nifty Consumer Durables closed in the red with financials, FMCG, auto and pharma recording higher losses.

Nifty Realty closed 1.15 per cent higher while Nifty IT was up 0.57 per cent.

Meanwhile, Nifty Bank and Nifty Financial Services were down 0.26 per cent and 0.25 per cent, respectively. Nifty Private Bank and Nifty PSU Bank were down 0.22 per cent and 0.13 per cent, respectively. Nifty FMCG was down 0.71 per cent while Nifty Auto was down 0.37 per cent. Nifty Pharma and Nifty Healthcare Index closed 0.62 per cern and 0.64 per cent lower, respectively.

Broader indices

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

Nifty Midcap 50 was down 0.08 per cent at closing while Nifty Smallcap 50 was up 0.35 per cent. The S&P BSE Midcap was up 0.22 per cent while the S&P BSE Smallcap was up 0.50 per cent.

The volatility index softened 0.89 per cent to 16.56.