Benchmark indices closed marginally higher amid volatility on Tuesday. The market started on a positive note amid mixed global cues and remained volatile through the day, oscillating between gains and losses. The indices closed higher, led by metals, pharma and PSU Bank stocks, and gains in heavyweights like Reliance. 

While the BSE Sensex closed at 57,808.58, up 187.39 points (0.33 per cent), recording an intraday high of 57,925.82 and a low of 57,058.77, the Nifty 50 closed at 17,266.75, up 53.15 points (0.31 per cent). The index recorded an intraday high of 17,306.45 and a low of 17,043.65.

Breadth favours decliners 

The market breadth remained in favour of the decliners with 2,238 stocks declining on the BSE as against 1,095 that advanced, while 78 remained unchanged. Furthermore, 324 stocks hit the lower circuit and 232 were locked in the upper circuit. Besides, 184 stocks touched a 52-week high level and 33 touched a 52-week low.

Vinod Nair, Head of Research at Geojit Financial Services, said, “Selling pressure from FIIs was countered by bargain hunting by domestic investors. European shares advanced over ECB President’s comments stating that there are lower chances of a measurable tightening of monetary policy, which helped in comforting global investors.”

Headwinds

Market has witnessed heavy selling pressure in the past few sessions post-Budget with a focus on interest rate, inflation concerns, rising bond yields, and increasing crude oil prices. Investors are now looking forward to the outcome of the Reserve Bank of India’s Monetary Policy Committee meeting which will be announced later this week. 

S Ranganathan, Head of Research at LKP securities, said, “As policymakers face one of the fastest pace of price increases in the developed markets, global stock markets are facing a challenge in pricing the likely actions by central bankers.”

“Back home, the Nifty opened extremely weak and drifted closer to 17,000 levels on geo-political worries and soaring oil prices with passive emerging market funds booking profits. As bond yields price in ahead of the RBI policy, supply of paper ahead of a mega primary market offering kept investors circumspect though indices managed to recover substantial lost ground to end in the green in afternoon trade,” added Ranganathan.

According to Santosh Meena, Head of Research, Swastika Investmart Ltd, “The Nifty 50 has turned negative for 2022. After a stellar run in 2021, we are seeing a consolidation in the market with high volatility and anecdotally Q1 of the calendar year remains sideways with negative bias.”

“The key highlight of current volatility or pressure in the market is heavy selling by FIIs due to the expectation of a sharp increase in interest rates in the USA, however, I won’t call it a panic because the market didn’t go anywhere in the last four months despite relentless selling by FIIs. We are also seeing some sectorial rotation from growth stocks to value stocks,” added Meena.

Tata Steel, Cipla, Reliance, Divi’s Lab and Bajaj Finserv were the top gainers on the Nifty while ONGC, Powergrid, SBI Life, Tata Consumer and IOC dragged the index down. 

Pharma in focus

On the sectoral front, while metals, pharma, PSU Banks and auto gained, realty, IT and oil & gas stocks dragged. Nifty Metal closed 0.80 per cent higher and Nifty PSU Bank was up 0.82 per cent. Nifty Pharma and Nifty Healthcare Index were up 0.47 and 0.24 per cent, respectively. 

Meanwhile, Nifty Realty closed 0.84 per cent lower. Nifty IT and Nifty Oil & Gas, too, were down 0.29 and 0.25 per cent, respectively. 

Broader indices

Broader market remained under pressure with indices closing in the red. Nifty Midcap 50 and Nifty Smallcap 50 were down 0.62 and 1.58 per cent, respectively. Similarly, the S&P BSE Midcap and S&P BSE Smallcap indices were down 0.45 and 1.40 per cent, respectively.

Meanwhile, the volatility index softened 3.68 per cent to 19.69.

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