Sensex, Nifty flat in early trade; FMCG stocks zoom

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Domestic benchmark equity indices opened tepid on Tuesday following Asian peers which were trading lower amid concern that surging prices for raw materials such as crude oil will stoke inflation. In opening trades, Sensex slipped 18 points or 0.03% to 59,280 while Nifty 50 was quoting at 17,688 lower by 2 points or 0.01%.

“The mother market US has turned weak. Dow and S&P 500 are more than 5 percent off from their record highs and thanks to the tech sell-off Nasdaq is 7 percent off from its record highs. Even though India is the most resilient among large markets, it would be difficult for the Indian market to remain decoupled and resilient when markets turn weak globally. There are indications that the one-way nature of the market is coming to an end and we are moving to a phase of high volatility,” said VK Vijayakumar, Cheif Investment Strategist at Geojit Financial Services.

The sharp surge in brent crude to $81.6 is a major macro headwind for the Indian economy. The MPC will face a major challenge in continuing with its accommodative monetary stance when the rising petroleum prices spill over to inflation numbers, Vijayakumar added.

Gainers & losers

Sectoral strand

Barring Nifty FMCG (up 0.23%) and Nifty Pharma (up 0.17%) all other sectoral indices on the NSE opened with a negative bias. The Nifty PSU Bank & Nifty IT index were top sectoral losers as they fell over 0.50% each. Nifty Bank, Nifty Auto, Nifty Realty and Nifty Metal indices lost in the range of 0.01-0.49%.

Volatility index India VIX spiked by 1.40% to 16.97 levels.

Broader markets

The broader markets were also trading flat as the BSE MidCap index was flat at 25,603. While the BSE SmallCap index was trading higher by 97 points or 0.34% at 28,794.

Buyers outnumbered sellers in today’s session. 1,693 shares advanced compared to 764 declining and 119 remained unchanged.

Global markets

Overseas, Asian stocks are trading lower on Tuesday following overnight losses on Wall Street, with the tech-heavy Nasdaq Composite falling more than 2%. Markets in mainland Chinese are closed through Thursday for the Golden Week holidays.

U.S. stock benchmarks end lower Monday as concerns about sticker-than-expected inflation grow on rising oil prices. A selloff for stocks deepened Monday, with markets succumbing to pressure in technology and tech-related stocks.

On Monday, the Organization of the Petroleum Exporting Countries and its allies kept their current agreement to gradually raise crude production each month, including a 400,000 barrels a day increase in November.

In U.S.-China relations, President Biden’s top trade negotiator, U.S. Trade Rep. Katherine Tai, was reportedly quoted on Monday as saying that China has failed to live up to its commitments under an agreement signed last year.

New orders for US-made goods accelerated in August. The Commerce Department said on Monday that factory orders increased 1.2% in August. Data for July was revised higher to show orders rising 0.7% instead of gaining 0.4% as previously reported.