Sensex falls for 3rd day, down 433 points; private bank stocks bleed

NEW DELHI: In a volatile move on Friday, domestic equity indices wiped off morning gains to settle in the red for the third day, tracking weak global cues and amid fast rising Covid-19 cases.

China's July retail sales unexpectedly fell and factory output missed estimates, dampening investor sentiment that stemmed from upbeat recent data from the country that was the first to emerge from lockdowns.

Investors are also watchful ahead of the US and China talks that are due to resume on Saturday. This will be the first meet between them since January before tensions escalated. Meanwhile, higher retail inflation also dimmed chances of policy rate cuts, dampening the mood.

The 30-share pack Sensex plunged about 900 points during the day from its highs, and closed down 433 points at 37,877, dragged mostly by private bank bloc of HDFC Bank, ICICI Bank, Kotak Mahindra Bank and Axis Bank, while ITC also contributed negatively.

Its NSE peer Nifty fell 122 points to 11,178 while India VIX spiked nearly 5.83 per cent to 21.76, snapping its 8-day losing streak. This means traders on Dalal Street expect greater volatility going ahead.

“Markets tracked weak global cues in the latter part of the day to end with losses. The uncertainty was with regards to the US-China trade meet this weekend and a lack of wholesome pickup in economic activity in many countries, including China,” said Vinod Nair, Head of Research at Geojit Financial Services.

He added that higher retail inflation numbers and weak results especially in the auto sector also contributed to the losses.

In the 50-pack Nifty, Eicher Motors that declared a loss and missed earnings estimates by a wide margin during the June quarter, was the biggest loser, down 7.15 per cent at Rs 20,124. Tata Motors, M&M, Axis Bank and Bajaj Finance were other top losers.

On other hand, JSW Steel was the biggest gainer, up 2.57 per cent to Rs 265.25. Sun Pharma, Cipla, NTPC, Titan, Tata Steel and Shree Cement were among other major names that gained over a per cent.

Broader market indices lost their momentum with Nifty Smallcap snapping 10-day gaining streak, closing 0.77 per cent down. Nifty Midcap fell 0.75 per cent. However, week-on-week both indices closed in the green, a sign market is favouring mid- and smallcaps.

“The outperformance of the broader market is in sync with our expectations. We continue to hold the view that the markets would favor mid and small caps over large caps in the near term,” said Hemant Kanawala, Head – Equity, Kotak Mahindra Life Insurance.
In the broader market space, Balkrishna Industries, Gujarat Gas, BHEL, RBL Bank, Rain Industries, Welspun India and Lemon Tree were the biggest drags, down up to 6 per cent. Bajaj Electronics, Bluestar, NBCC, Indiabulls Ventures and JSW Energy were among top gainers, which climbed up to 8 per cent.

Among sectoral indices, Nifty PSU Bank and Nifty Auto were the biggest losers, falling over 2.5 per cent each. Nifty Financial Service and Nifty Bank also fell more than 2 per cent. Nifty Metal and Nifty Pharma were the two gainers, adding more than a per cent each.

Market breadth was in favour of losers with 1,626 stocks closing with cuts while 1,091 names closed with gains. 150 stocks hit their 52-week high level, mostly from small and microcap space. Nearly 330 stocks hit the upper circuit while 234 stocks lower circuits.

Globally, share markets traded deep in the red. European markets were trading with cuts of 1-2 per cent. European shares were dragged lower by a hit to travel stocks after Britain added more European countries to its quarantine list. In Asia, Japan’s Nikkei closed with some gains but Singapore Strait Times and Hong Kong’s Hang Seng ended the day lower.

Let’s prepare for Monday

• The week ahead for the global markets will be shaped by the outcome of the US-China meeting, and with Indian markets increasingly in sync with global cues, this could have an impact on the opening days of the next week, said Nair of Geojit Financial.

• Q1 earnings: We are at the fag end of the earnings season. There are relatively fewer companies that will present their numbers on Monday. They include Can Fin Homes, Hindustan Motors and Petronet LNG.