Sensex drops 224 points at open, Nifty slips below 15,700; financials, IT stocks drag

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Domestic equity benchmarks opened lower on Wednesday tracking a negative trend in global equities. In early trade, Sensex declined 224 points or 0.43% to 52,361, while Nifty retreated 63 points or 0.41% at 15,682. Markets are likely to be volatile during the day in the run-up to Thursday’s F&O expiry and US Fed meet. Besides, FII flow trends and IMF’s downgrade on growth projections can also weigh on investor’ sentiment.

“There is a mild risk-off in equity markets globally as reflected in the rising dollar (dollar index at 92.80 now). The sell-off in Chinese tech stocks on Beijing’s regulatory crackdown has triggered concerns about whether this sell-off will spread to other segments. China is too big now. It can cause flutters in global markets. This space needs to be watched cautiously,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services

The Nifty range 15600 – 15900 has become strong with sustained FII selling around 15900 and strong retail & DII buying around 15600. This range is likely to hold for some time. A significant trend in the market now is sectoral shifts. Yesterday there has been across a board selling in pharma stocks. Profits booked in this segment is moving into other sectors. The relative outperformance in front line financials indicates a sectoral shift, added Vijayakumar.

Gainers & losers

Sectoral strand

All sectoral indices were in the red. Nifty Realty, Nifty Auto, Nifty FMCG, Nifty Bank and Nifty IT edged lower with losses of up to 0.60%. Fear gauge index India VIX spiked 3.81% to 13.73 levels.

Broader market

The broader market was in line with benchmark indices. BSE MidCap index opened with losses of 0.44% to 22,753. On the other hand, the BSE SmallCap index was trading at 26,374 down 0.23%.

Market breadth was negative as 1,262 shares declined on the BSE, while 1,154 advanced and 89 remained unchanged.

Earnings today

Maruti Suzuki India, Nestle India, ABB India, Astec Lifesciences, Birlasoft, Central Bank of India, Century Textiles & Industries, Coforge, Dhanlaxmi Bank, Embassy Office Parks REIT, Gateway Distriparks, Geojit Financial Services, Greenpanel Industries, Grindwell Norton, Happiest Minds Technologies, Heritage Foods, HSIL, ICRA, IDBI Bank, Intellect Design Arena, JM Financial, Mahindra Lifespace Developers, Mahanagar Gas, Mold-Tek Packaging, Pfizer, Radico Khaitan, Ramco Systems, Route Mobile, RPG Life Sciences, Sagar Cements, SRF, Tata Coffee, TCI Express, TeamLease Services, United Breweries, UTI Asset Management Company, and Welspun India will be announcing their quarterly results today.

Global markets

Overseas, Asian stocks are trading lower on Wednesday, with Hong Kong struggling to recover from a two-day rout.

US stocks fell for the first time in six days on Tuesday ahead of quarterly earnings reports from several megacap technology companies.

Investors are awaiting the Federal Reserve’s update on its monetary policy as the central bank’s two-day meeting began. The Federal Open Market Committee will release a statement when the meeting concludes Wednesday, followed by Chairman Jerome Powell’s news conference.

The International Monetary Fund warned Tuesday that there’s a risk inflation will prove to be more than just transitory, pushing central banks to take pre-emptive action.

Meanwhile, the International Monetary Fund (IMF), on July 27, cut India’s gross domestic product (GDP) growth forecast to 9.5% for fiscal year 2021-22, from the previous forecast of 12.5%, citing the hit on economic activity and demand due to the deadly ‘second wave’ of the COVID-19 pandemic. For fiscal year 2022-23, however, IMF expects economic growth of 8.5%, larger than the 6.9% it had projected in April.