Sensex falls over 250 points in early trade, Nifty near 15,500; IT stocks under pressure
PowerGrid, Sun Pharma, NTPC, UltraTech Cement and Maruti were among the top Sensex gainers
Indian benchmark equity indices opened in the red on Wednesday tracking weakness in global markets and inflation concerns. Market investors will keep an eye on RBI’s 3-day monetary policy meeting, which begins today, with Covid-related updates, oil price movement, and corporate results among other key events. At open, Sensex dropped 268 points or 0.52% to 51,666, while the broader Nifty 50 stood at 15,510, down 57 points or 0.37%.
PowerGrid, Sun Pharma, NTPC, UltraTech Cement and Maruti were among the top Sensex gainers. Tech Mahindra, ITC, Kotak Mahindra Bank, HDFC & ICICI Bank were among the laggards.
Sectoral trends
Nifty Metal index was shining bright with gains of 1.11%, Nifty Auto rose 0.64%, Nifty Pharma was up 0.43%. On the other hand, Nifty IT slipped 1.22% whereas Nifty FMCG & Nifty Bank indices were down about 0.34% each.
The broader market outperformed benchmark indices as the BSE Midcap & BSE SmallCap indices were trading with gains of over 0.73% and 0.61% respectively. Even the market breadth favored the bulls as 1,151 stocks advanced versus 597 shares declined and 500 scrips declined.
“The steady decline in fresh Covid cases and rising recovery rates indicate that India is succeeding in bending the Covid curve. This has paved the way for progressive unlocking and consequently unlock- trade is happening in the broader market. The outperformance of the mid and small-cap indices this year is impressive: Midcap and small-cap indices are up by 23.54% and 29.91% respectively YTD while Nifty is up only by 11.39 % YTD. With such outperformance valuations in the broader market too is becoming a concern,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
With no short-term risks to the market, consolidation is likely in the near term with a stock-specific action in response to the news. Since markets are over-bought and over-valued investors should exercise caution even when the markets are exhibiting surprising resilience, added Vijayakumar.
Earnings today
Motherson Sumi Systems, MTAR Technologies, Muthoot Finance, PVR, Burnpur Cement, Garodia Chemicals, Lyka Labs, NRB Bearings, Octaware Technologies, Panacea Biotec, Ratnamani Metals & Tubes amongst others are slated to announce their quarterly earnings for the quarter ended March 2021.
Stocks in spotlight
Hero MotoCorp sold 183,044 units of two-wheelers in the month of May 2021. Sales in the month of May 2021 were adversely impacted due to the closure of plant operations in view of the escalation in the spread of the Coronavirus in the country.
Eicher Motors said the company sold 27,294 motorcycles in May 2021, against 19,113 motorcycles sold in May 2020.
ITC’s net profit fell 2.62% to Rs 3,755.47 crore on 12.8% increase in total income to Rs 14,921.76 crore in Q4 March 2021 over Q4 March 2020.
Sugar Stocks will be focus as OMCs have on 25-May floated their 4th cycle of EOI, inviting bids from ethanol producers for another about 26 crore litres of ethanol.
Sebi has barred eight entities, including two employees of Infosys, from the securities market for indulging in insider trading activities in the shares of the IT major.
Route Mobile announced an agreement with Emirates Integrated Telecommunications Company (EITC) – du, UAE’s second Integrated Telecom Service Provider, by offering a turnkey solution using Route Mobile’s Smart Messaging Hub which enables du to launch a highly scalable revenue-generating messaging platform to enable A2P wholesale transit business.
Fineotex Chemical said that the company’s board of directors has approved raising of funds up to Rs 200 crore in one or more tranches by way of issuance of securities, through one or more permissible mode(s).
Patel Engineering said the company and its consortium lenders have completed the execution of the necessary agreements, deeds, Security creation, undertakings and other relevant documents for the implementation of the One Time Resolution (OTR) Plan on May 31, 2021.
Global markets
Overseas, Asian stocks are trading mixed on Wednesday, with official data showing higher-than-expected growth in Australia’s economy for the first quarter.
Australia’s gross domestic product rose 1.8% from last quarter on a seasonally adjusted basis in the first three months of the year, according to official data released Wednesday.
South Korea’s consumer inflation accelerated to a more than nine-year high in May. Consumer prices rose 2.6% in May from a year earlier, government data showed on Wednesday, logging the fastest growth since April 2012. It grew 2.3% in April.
US stocks finished Tuesday mostly flat as optimism about the economic reopening met lingering angst about inflation and price pressure.
Investors began the first week of June on a high note as Covid cases continue to decline, and vaccinations rise in the US. In a major milestone, more than half the US population has received at least one dose of a Covid vaccination, according to data posted by the Centers for Disease Control and Prevention.
Growth in US manufacturing picked up in May. The Institute for Supply Management, a trade group of purchasing managers, said Tuesday that its index of manufacturing activity rose in May to a reading of 61.2 in May from 60.7 in April.