Sensex slips 300 points, Nifty ends at 16,451; FMCG stocks buck the trend

Indian benchmark equity indices settled lower on Friday led by losses in metal stocks amid a heavy sell-off in global markets. Sensex declined 300 points, or 0.4% to close at 55,329, while Nifty50 ended at 16,451, down 118 points or 0.7%. Both the indices had dropped to intra-day lows of 55,014 and 16,376, respectively.

Nifty Metal, plummeting nearly 6.5%, was the top sectoral laggard followed by Nifty Media, Nifty Realty and Nifty PSU Bank.

“Bears took control of today’s volatile session as weak cues from the global markets triggered selling across all sectors except FMCG. Fast spreading delta virus, Fed’s taper plans and China’s ongoing regulatory crackdown forced global markets to trade with cuts. Though the selling was broad-based, metal stocks were most affected due to a sharp plunge in iron ore futures across the world,” said Vinod Nair, Head of Research at Geojit Financial Services.

Today’s sell-off wiped off Rs 3.15 lakh crore of investors wealth.

Gainers & losers

Top gainers & losers on the Sensex.

Sectoral strand

Barring the Nifty FMCG index (up 2.27%) all other sectoral indices ended in the red. The Nifty Metal index plummeted over 6.43%. While Nifty Realty dropped 3.58% and the Nifty Pharma index lost 2.56%. Whereas Nifty Auto and Nifty Bank indices slipped 1.62% and 1.46%, respectively. On the other hand Nifty IT was down by 0.29%.

The fear gauge index India VIX spiked 8.60% to 14.01 levels.

Broader market

The sell-off in the broader markets was much serve compared to benchmark indices as the BSE MidCap index declined 1.91% to 22,679. While on the other end the BSE SmallCap index plunged 1.83% and settled at 25,758.

Bears outpowered bulls in today’s trade as 2,445 shares declined compared to 750 advanced and 136 remained unchanged.

Economy

The credit rating agency, CRISIL on Wednesday, 18 August 2021, upgraded India Inc’s credit quality outlook for FY22 from “cautiously optimistic” to “positive”, based on continued improvement in demand. This comes after the setbacks caused by the second wave of the Coronavirus pandemic in Q1 of FY22. “Increasing vaccination coverage should also reduce the impact of the third wave if it comes,” CRISIL said in a statement.

CRISIL Ratings Chief Rating Officer Subodh Rai said the outlook revision factor in strong economic growth, both domestic and global, and containment measures that are localised and less stringent compared with the first wave. This should sustain the pick-up in domestic demand even if the third wave hits. “We believe that India Inc is on a high and strong footing,” he said.

Global markets

US Dow Jones futures were down 139 points, indicating a weak opening in the US stock market later today.

Shares in Europe and Asia declined on Friday, 20 August 2021, as concerns over monetary policy, the delta COVID-19 variant and China’s tech crackdown linger.

Tougher rules for handling user data are Beijing’s latest step against big tech. State media also scrutinized liquor makers, online pharmacies and cosmetics firms. Meanwhile, China’s one-year loan prime rate (LPR) and five-year LPR were both left unchanged at 3.85% and 4.65%, respectively, on Friday.

In Europe, Germany’s finance minister said on Friday that the economy is on track for a lasting and strong recovery in the third quarter. There will be new growth figures for Germany out next week.
British retail sales dropped in July 2021 by 2.5% from the previous month, according to the Office for National Statistics.