Sensex, Nifty choppy in early trade; IT, FMCG stocks rise

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Indian benchmark equity indices swung between gains and loses in the early trade on Monday amid a negative trend in global equities. At 10:10 am, Sensex was at 55,481.13, up 43.84 points it 0.08%, while Nifty was at 16,525.85, down 3.25 points or 0.02%.

“The current trend in the market is the comeback of high-quality large-caps like HDFC twins, RIL, Bharti, and Kotak Bank, while the mid-and small-caps are languishing. This has pushed up the Nifty by 4.9% so far this month while the small-cap index is down 3%. This is a desirable healthy development since the market is slowly removing the froth in the broader market space. Investors should stick to quality in this over-valued market. Quality always delivers in the long-term even if there can be short-term pains,”  said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Investors should be mindful of geopolitical developments like the unfolding tragedy in Afghanistan. Issues that may appear unconnected to markets can suddenly develop into a crisis with far-reaching consequences. Since institutions – both FIIs and DIIs – are not on-sell- mode and retail are buying on every dip, the market is likely to remain resilient, added Vijayakumar.

Gainers & losers

Sectoral strand

Sectoral indices on the NSE were mixed. Nifty Pharma falling nearly 1% was the top sectoral laggard followed by Nifty Media and and Nifty Auto. Nifty FMCG, Nifty IT, Nifty Financial Services and Nifty Metal were in the green.

Broader market

The broader markets were also trading flat. The BSE MidCap index opened flat with a negative bias of 0.01% at 22,938 level and the BSE SmallCap index was quoting at 26,326 down by 0.11%.

The market breadth was negative as 1,260 shares declined compared to 1,203 advanced and 104 remained unchanged.

Global markets

Overseas, Asian stocks are trading lower on Monday as the delta virus strain hampers economic reopening and as investors reacted to the release of economic data. South Korea’s markets are closed on Monday for a holiday.

Retail sales in China rose 8.5% in July as compared with a year ago, according to official data released Monday. Meanwhile, industrial production grew 6.4% in July.

Japan’s GDP rose 0.3% in the second quarter as compared with the previous three months, when it contracted 0.9%, according to official preliminary estimates released Monday.

In US, the Dow Industrial and S&P 500 edged up to closing records on Friday, buoyed by a climb in Walt Disney shares, but a sharp drop in consumer sentiment kept gains in check.

The University of Michigan’s sentiment read for August printed at just 70.2, the weakest since December 2011.