Stockmarket. Volatile Sensex, Nifty close weak, amid continued sell-off

Benchmark indices closed in the red on Friday amid volatility, witnessing selling pressure for the fourth consecutive session.

Market opened on a positive note, but gave up all early gains, dragged by metals, IT, pharma and FMCG. However, financials and realty stocks gained.

The BSE Sensex closed at 60,821.62, down 101.88 points or 0.17 per cent. It hit an intraday high of 61,420.13 and a low of 60,551.15. The Nifty 50 closed at 18,114.90, down 63.20 points or 0.35 per cent. It recorded an intraday high of 18,314.25 and a low of 18,034.35.

The broader market also continued to witness steeper correction. However, the volatility index further softened 2.71 per cent to close below 18 at 17.55.

Market breadth negative

The market breadth continued to remain in favour of the decliners with 1,983 stocks declining on the BSE, 1,315 advancing and 150 remaining unchanged. Furthermore, 301 stocks hit the lower circuit as compared to the 246 stocks that were locked in the upper circuit. Besides, 170 stocks touched a 52-week high level and 32 touched a 52-week low.

Investors lose around ₹8 lakh crore

Binod Modi, Head Strategy at Reliance Securities said, “Domestic equities gave up initial gains today as continued profit-booking by investors dragged benchmark indices down for the fourth consecutive day.”

“For the week Nifty contracted over 1 per cent, while around ₹8 lakh crore wiped out from investors’ wealth during the period.”

HDFC, Bajaj Auto, Kotak Bank, Axis Bank and ONGC were the top gainers on the Nifty 50 today while Hindalco, Coal India, Tata Motors, ITC and Tata Consumer were the top laggards.

“Notably, high input costs have adversely impacted margins and profitability of select consumer and manufacturing companies despite steady volume and sales growth. This essentially raises concerns about sustainability of earnings rebound in subsequent quarters, which has weighed on sentiments. In our view, market may remain volatile with downward bias in the near term and investors will track pricing power of the industries,” said Modi.

According to Hemant Kanawala, Head – Equity, Kotak Mahindra Life Insurance Co. Ltd, “Recent firming of commodity prices especially energy is concerning as it may harden inflation expectations causing additional worry to central bankers who are trying to exit surplus liquidity conditions in a calibrated way.”

“The firming of prices is beginning to impact the margins of companies in consumer sector even as it offers operating leverage tailwinds companies in the natural resources sector. Amid normalisation of liquidity and rising concerns on inflation/margins, we anticipate near term volatility in the Indian markets, which could offer an opportunity to buy given that fundamentals of the economy remain strong,” added Kanawala.

According to Shibani Kurian, Senior EVP & Head- Equity Research, Kotak Mahindra Asset Management Company, various factors including the demand momentum in the festive season, movement in commodity inflation and mobility trends will impact market sentiments moving forward.

“Commentary of companies that are yet to report results of Q2FY22 and institutional flows should be other factors to watch out for market participants,” added Kurian.

Metals lose shine

On the sectoral front, a majority of indices closed in the red. Financials, barring PSU Bank and realty managed to extend gains as IT, metals, pharma, FMCG and auto dragged.

Nifty Metal was down 3.04 per cent at closing while Nifty IT was down 1.44 per cent. Nifty Pharma was down 1.55 per cent while Nifty Healthcare Index was down 1.77 per cent. Nifty Auto and Nifty FMCG closed 1.07 per cent and 1.22 per cent lower, respectively.

On the other hand, Nifty Realty was up 2.56 per cent. Nifty Bank was up 0.73 per cent while Nifty Financial Services was up 0.59 per cent. Nifty Private Bank was up 0.99 per cent. Meanwhile, Nifty PSU Bank was down 0.47 per cent.

“Financials continued to remain upbeat led by improved visibility of credit growth and ease in asset quality concerns. However, most key sectoral indices remained under pressure with Metals witnessing steeper correction, while FMCG, IT and Pharma indices witnessed correction more than 1 per cent. Realty stocks were in focus today mainly on expectations of strong September quarter earnings,” said Modi.

Broader indices

The broader market also continued to witness selling pressure with broader indices remaining in the red.

The Nifty Midcap 50 was down 0.56 per cent at closing while the Nifty Smallcap 50 was down 1.43 per cent. The S&P BSE Midcap was down 0.97 per cent while the S&P BSE Smallcap was down 1.20 per cent.

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