Sensex, Nifty scale new peaks, but broader market sees sell-off

Our Bureau Mumbai | Updated on August 04, 2021

Sensex up 546 pts at closing, Nifty above 16,200

Although benchmark indices scaled new peaks on Wednesday, the rally was narrow, sustained solely by financials. Stocks across the mid- and small-cap space corrected as profit-booking emerged strongly.

The BSE Sensex, which breached the 54,000-mark for the first time, ended on a high at 54,369.77, up 546.41 points or 1.02 per cent. It recorded a fresh all-time high of 54,465.91 and a day’s low of 54,034.31.

The Nifty 50 also recorded a fresh all-time high of 16,290.20, closing at a high of 16,258.80, up 128.05 points or 0.79 per cent. It recorded an intraday low of 16,176.15.

Breadth turns negative

Even as major indices recorded fresh highs, the breadth of the market turned negative amid selling pressure with the advance-decline ratio at 1:2. As many as 2,119 stocks declined, 1,137 advanced, and 116 remained unchanged on the BSE. While 344 stocks hit an upper circuit, almost 329 stocks were locked in the lower circuit. Besides, 467 stocks touched 52-week highs while 16 touched their 52-week lows.

Binod Modi, Head-Strategy at Reliance Securities said, “Domestic equities extended gains with the benchmark Nifty scaling a fresh high mainly on the back of a sharp rebound in heavyweight financials.”

“Further, positive cues from global equities also lifted sentiments. Notably, financials have been the sole driving force today for market rally, which essentially triggered after a better-than-expected June quarter performance reported by SBI. However, it was not a broad-based rally as a sharp profit-booking remained visible for the second consecutive day in mid-cap and small-cap stocks,” added Modi.

HDFC, Kotak Bank, ICICI Bank, State Bank of India and HDFC Bank were the top gainers on the Nifty 50 while Grasim, Titan, Tata Motors, Adani Ports and Hindalco were the top laggards.

S Hariharan, Head - Sales Trading, Emkay Global Financial Services, said, “Nifty is trading close to the technical resistance from a trendline connecting earlier highs in CY2021 (February and June) – seen in conjunction with non-confirmation of strength in mid-cap and small-cap indices, which had hitherto been out-performing headline indices, this suggests a narrow advance, and potential for a short-term pull-back.”

“Long futures open interest for the retail segment has seen some unwinding over the last week and net long positions are down to mid-June levels; this was also evident in cheap roll spreads during July expiry, and points to reluctance to extend leverage on long positions. High-beta sectors appear most vulnerable to a correction in the near-term,” he added.

Financials remain resilient

On the sectoral front, a majority of indices closed in the red as financials gained focus.

The Nifty Bank was up 2.33 per cent while the Nifty Financial Services rose 2.59 per cent. The Nifty Private Bank was up 1.94 per cent while Nifty PSU Bank rose 0.31 per cent.

Meanwhile, Nifty FMCG was down 0.93 per cent, Nifty Realty fell 1.67 per cent and Nifty Auto lost 0.93 per cent. Nifty IT was down 0.61 per cent.

Broader indices

The mid-cap and small-cap stocks continued to witness profit-booking. The Nifty Midcap 50 was down 1.19 per cent while the Nifty Smallcap 50 was down 1.11 per cent.

The S&P BSE Midcap was down 1.05 per cent while the S&P BSE Smallcap was down 1.06 per cent.

The volatility index fell 3.89 per cent to 13.21.

Published on August 04, 2021

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