Sensex, Nifty volatile in early trade; PSU banks under pressure

After two straight days of solid gains, Indian benchmark equity indices opened flat on Thursday amid a cautious global market setup. Sensex opened 20 points or 0.03% higher at 54,389, while Nifty advanced 30 points or 0.18% to 16,288.

The 30-share index rose to a new high of 54,576 and Nifty touched a lifetime high of 16,294 in early trade today.

“A major factor favoring the rally is the improving macros as reflected by buoyant tax collections, falling fiscal deficit, low CAD, ample forex reserves, expanding PMI, booming exports, and softening crude. Business micros will improve under such a benign macro environment assisted by lower tax and low-interest costs. Markets might be factoring in this emerging promising scenario,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

The return of FIIs with buying of Rs 4946 cr in cash market during the last two days is bad news for the bears. An important feature of yesterday’s market action is that while Nifty gained 128 points thanks to the rally in leading financials, the broader market underperformed. Markets may consolidate for a while before making fresh moves in response to emerging triggers, Vijayakumar added.

Top gainers & losers

Top gainers & losers for the Sensex.

Sectoral strand

Sectoral indices opened in mixed. Nifty IT index climbed 0.35%, followed by the Nifty Pharma rose 0.31% and Nifty Metal, as well as Nifty FMCG, were flat up about 0.11%.

While Nifty Auto, Nifty Bank and Nifty Realty were the laggards losing up to 0.40%

Broader market

The broader market opened lower as BSE MidCap index lost 0.15% to 23,095 whereas the BSE SmallCap index is quoting at 26,734 down around 0.42%.

Overall market breadth was negative as 898 shares advanced compared to 1,565 declined while 92 remained unchanged.

Earnings today

GAIL India, Cipla, Adani Power, Aditya Birla Capital, Indiabulls Housing Finance, Accelya Solutions India, Ador Welding, Andhra Petrochemicals, Arvind, Bajaj Consumer Care, Birla Corporation, Brigade Enterprises, Cera Sanitaryware, Edelweiss Financial Services, Escorts, Gujarat Gas, Hikal, Honeywell Automation India, Ipca Laboratories, Jubilant Industries, NCC, Narayana Hrudayalaya, PTC India Financial Services, Prince Pipes and Fittings, Quess Corp, REC, Thermax, and TTK Healthcare are slated to announce their earnings for April to June quarter today.

Monetary policy

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) is scheduled to announce its bi-monthly policy review on August 6 at the end of the three-day meeting held from August 4 to August 6. As per reports, the RBI is likely to maintain the status quo on interest rates. The MPC, a six-member team headed by RBI governor Shaktikanta Das, had left the rates unchanged last time, citing concerns about inflation.

Global markets

Overseas, Asian stocks are trading mixed on Thursday, following declines overnight on Wall Street.

U.S. stocks closed mostly lower on Wednesday, with the S&P 500 falling from a record high after data signaled a slowdown in jobs growth in July, and General Motors tracked its worst day since early March.

Shares of General Motors dropped sharply, weighing on the broader market, after the automaker missed earnings expectations for the second quarter. The automaker did raise its guidance for a key profit metric for the rest of the year.

Vice-Chairman Richard Clarida said the Fed is on track for a liftoff in interest rates in 2023 and an announcement later this year on paring bond purchases. Clarida painted an upbeat picture of the outlook while acknowledging that the rapid spread of the delta virus strain poses a downside risk.

A measure of US services industry activity jumped to a record high in July. The Institute for Supply Management said on Wednesday its non-manufacturing activity index raced to 64.1 last month, the highest reading in the series’ history, from 60.1 in June.

The ADP private payroll survey showed a gain of 330,000 jobs for July. The Labor Department’s official jobs report, which typically has more impact with investors, will be released on Friday.