Benchmark indices rebounded sharply from the previous session’s losses to close higher on Tuesday amid volatility.
Market opened on a flat note on Tuesday amid volatility, tracking global cues. The possible default of China’s real estate giant Evergrande spooked investors in the global market. However, indices managed gains on the back of sustained foreign inflows. Benchmarks extended gains further during closing hours, led by metals, IT, pharma and FMCG and a recovery in financials. Auto and consumer durables remained under pressure throughout the day.
The BSE Sensex bounced back to trade above the 59,000-mark and closed at 59,005.27, up 514.34 points or 0.88 per cent. It hit an intraday high of 59,084.51 and a low of 58,232.54. The Nifty 50 closed at 17,562.00, up 165.10 points or 0.95 per cent. It hit an intraday high of 17,578.35 and a low of 17,326.10.
After rising nearly 15 per cent to close above 17, the volatility index softened 5.55 per cent to 16.52.
Advance-decline ratio at 1:1
The breadth of the market, though in favour of the advancers, was neutral with almost an equal number of advancers and decliners. As many as 1,616 stocks advanced on the BSE, as compared to 1,613 stocks that declined while 172 remained unchanged. Furthermore, 320 stocks hit the upper circuit as compared to the 208 stocks that were locked in the lower circuit. Besides, 169 stocks touched a 52-week high and 30 touched a 52-week low.
However, broader markets, especially smallcap stocks, continued to witness further correction.
Investors will be closely watching the outcome of the crucial Federal Open Market Committee (FOMC) meeting this week.
According to Binod Modi, Head Strategy at Reliance Securities, the gains in the benchmarks today were mainly led by a brisk rebound in defensive sectors like IT, pharma and FMCG. Metals also rebounded sharply as investors utilised the steep correction in metals stocks as an opportunity to buy in dips.
“Additionally, positive cues from global equities also supported market recovery. However, investors appeared to remain sceptical about smallcap stocks as the Nifty smallcap index continued to see moderate correction,” Modi said.
“Today’s recovery in equities shows that markets have discounted possible fallout from likely default of Chinese real estate giant Evergrande, while Thursday would be crucial as the $83 million interest payment is due for Evergrande. The increasing possibility of earnings downgrade in the US markets following a sharp rise in Coronavirus daily caseload and the continued reform measures undertaken by the government in India appear to have revived FIIs’ interest in the domestic market. An inflow of over ₹65 billion in the last week from FIIs vindicates this,” added Modi.
JSW Steel, ONGC, Bajaj Finance, IndusInd Bank and Tata Steel were the top gainers on the Nifty 50 while Maruti, BPCL, Hero MotoCorp, Bajaj Auto and Nestle India were the top laggards.
Auto stocks under pressure
On the sectoral front, all indices except Nifty Auto, Nifty PSU Bank and Nifty Consumer Durables closed in the green.
Metals and realty led today’s rally while IT, pharma and FMCG also gained. Financials, barring PSU Bank, also recovered in the second half. While auto and consumer durables dragged through the day.
Nifty Metal was up 2.55 per cent at closing while Nifty Realty was up 3.57 per cent. Nifty IT was up 1.94 per cent. Nifty Pharma and Nifty Healthcare were up 1.29 per cent and 0.96 per cent, respectively. Nifty FMCG was up 1.09 per cent. Nifty Bank and Nifty Financial Services closed 0.24 per cent and 0.73 per cent higher, respectively. Nifty PSU Bank was down 0.05 per cent.
Meanwhile, Nifty Auto was down 0.46 per cent. Nifty Consumer Durables was down 0.18 per cent.
Smallcaps drag
As for the broader indices, midcap stocks rebounded sharply while smallcaps continued to face pressure.
Nifty Midcap 50 was up 0.79 per cent at closing while Nifty Smallcap 50 was down 0.30 per cent. The S&P BSE Midcap was up 0.79 per cent while the S&P BSE Smallcap was up 0.14 per cent.