NEW DELHI: Profit booking in RIL and IT names dragged benchmark indices lower even as buying in auto and metal names provided some support. Weak global cues also hit the sentiments back home.
Bluechip indices have rallied for 10 straight days, the biggest rally in 13 years, and have shown signs of fatigue in the last few days. Analysts expect volatility to remain and suggest cautious stock picking. India VIX, the measure of volatility, spiked over 4 per cent.
“The Nifty has opened this morning with less clarity in its intra day direction. While the larger trend remains positive, the intra day trend seems to be a little confusing. We would need to get past 12,030-12,040 for an intra day move up and a break of 11,800 would signal a move down. Until then, we could expect some rangebound movements with a positive bias,” Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments.
Equity investors lost Rs 2.7 lakh crore in Thursday session as total market cap of BSE-listed companies slid to Rs 157.85 lakh crore.
Factors driving markets
- Early stimulus hopes fade: US Treasury Secretary Steve Mnuchin said he and House of Representatives Speaker Nancy Pelosi were “far apart” on another coronavirus economic relief package, and that a deal would be hard to reach before the November 3 elections.
- US-China tensions: Tensions between Beijing and Washington remain in view after the US State Department submitted a proposal for the Trump administration to add China’s Ant Group to a trade blacklist, according to a Reuters report, before the financial technology arm of e-commerce giant Alibaba is slated to go public.
- Covid makes a comeback: Concerns that a resurgence in the Covid-19 pandemic could lead governments to again shut down economies spurred profit-taking, particularly after the recent stock rally. With cases surging, some European nations are closing schools, cancelling surgery and enlisting student medics as overwhelmed authorities braced for a repeat of the nightmare scenario seen earlier this year.
How are bluechips doing
After opening with minor cuts, benchmark indices extended their losses as the day progressed. At 3.08 pm, BSE flagship Sensex was down 1,039 points or 2.55 per cent to 39,755. NSE benchmark Nifty followed, falling 290 points or 2.43 per cent to 11,680.
In the 50-share pack Nifty, Tata Steel was the biggest gainer, up 2.33 per cent. BPCL, ONGC, UPL, NTPC, Indian Oil, Adani Ports and Asian Paints were among other major gainers.
IT pack saw massive profit booking as HCL Tech was the top loser, down 3.84 per cent. Tech Mahindra, HCL Tech, ICICI Bank, Bajaj Finance, TCS and ITC were among other major names that opened with cuts.
Broader market indices were trading lower with Nifty Smallcap down 0.38 per cent while Nifty Midcap dipped 0.41 per cent. Broadest index on NSE, Nifty 500 was down 0.87 per cent.
Ashok Leyland, Bharat Forge, Tata Power, Alok Industries, Tata Elxsi and Century Textiles were among major gainers from the space while Lemon Tree Hotels, Thyrocare, PNB Housing Finance, Vodafone Idea, Trent and Bata India were under selling pressure.
MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.5 per cent while Japan’s Nikkei dropped 0.5 per cent.
U.S. S&P 500 futures sagged 0.27 per cent in Asia after major U.S. stock indexes ended the previous session lower, with the S&P 500 closing down 0.7 per cent and the Nasdaq Composite Index shedding 0.8 per cent.
What to expect
- Q2 earnings: Mindtree, Jupiter Infomedia, Hathway Cable, Cyient, Dolat Capital, South Indian Bank and Trident were among those that will come out with their numbers.