Midsession: Weak global cues drag Sensex down 189 points, Nifty below 15,700

Benchmark indices were trading in the red, dragged by IT and financials.

Market, after opening on a negative note amid weak global cues, recovered marginally led by metals and pharma but remained in the red. US stocks closed lower amid uncertainties around economic recovery. Asian shares were also trading lower as concerns around the Delta variant and its impact on economy.

At 1 pm, the BSE Sensex was at 52,379.55, down 189.39 points or 0.36 per cent. It hit an intraday high of 52,555.73 and a low of 52,228.01. The Nifty 50 was trading below the 15,700 mark at 15,677, down 50.90 points or 0.32 per cent. It hit an intraday high of 15,730.85 and a low of 15,632.75.

Bajaj Finserve, Tata Steel, Adani Ports, Divi’s Lab and Bharti Airtel were the top gainers on the Nifty 50 while Bajaj Auto, TCS, Axis Bank, Wipro and Shree Cements were the top laggards.

According to Likhita Chepa, Senior Research Analyst, CapitalVia Global Research Ltd, tracking the weakness in the global peers, Indian market made a gap down opening and are trading lower dragged by energy, oil & gas sectors. “

TCS down 1%

The shares of Tata Consultancy Services were trading one per cent lower after the company’s Q1 2022 results failed to impress analysts. The company was trading 1.28 per cent lower on the NSE at ₹3,216.90 per share.

The company on Thursday announced a 28.5 per cent increase in net profit to ₹9,008 crore during the first quarter of this fiscal compared to ₹7,008 crore in the same period last year. But, on a sequential basis, the profit fell by 2.5 per cent compared to ₹9,246 crore in Q4 of FY21.

The company’s consolidated revenue from operations jumped to ₹46,132 crore in the first quarter from ₹38,920 crore in the same period last year.

ICICI Securities downgraded the rating of the company from Hold to Reduce with a target price of ₹2,935.

“While India business is likely to see a pent-up in September 2021 , Europe is guided to remain soft for another 1-2 quarters. In the likely scenario of clients returning to offices, management indicated office work may become inevitable. Further, TCS expects most of its discretionary costs (including travel) to return by the end of the Fiscal,” it said in its report.

“This result and commentary reinforce our anti-consensus argument that growth and margins of the industry in the post-covid equilibrium will be largely similar to pre-covid levels (elaborated in our October 20 thematic). As disappointments (on consensus earnings) related to this continues, the current lifetime-high multiples (30x FY23E EPS) are unlikely to sustain. We downgrade the stock to Reduce (from Hold earlier),” it said.

However, Yes Securities maintained a Buy rating with a target price of ₹3,600, seeing an upside of 10.6 per cent. Motilal Oswal Research maintained a Neutral rating on the stock with a target price of ₹3400, seeing a 4 per cent upside.

Financials, IT and Auto drag

On the sectoral front, while financials, auto and IT lagged, metal and pharma rebounded sharply.

Nifty Bank and Nifty Financial Services were down 0.44 per cent and 0,38 per cent, respectively. Nifty Auto was down 0.52 per cent while Nifty IT was down 0.60 per cent on profit-booking.

Nifty Metal was up 1.25 per cent while Nifty Pharma was up 0.34 per cent.

Nifty Realty also gained and was up 1.65 per cent.

Broader indices

Broader indices outperformed the benchmarks.

Nifty Midcap 50 was up 0.24 per cent while Nifty Smallcap 50 was up 0.32 per cent. The S&P BSE Midcap was up 0.39 per cent while the S&P BSE Smallcap was up 0.38 per cent.

The volatility index softened 2.24 per cent to 13.26.

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