Market ends on a weak note after trading close to a record high through the day
Fall in OMCs, midcaps drag the Nifty in the red. Jubilant Foodworks leads the fall in midcaps after reports suggested bugs being found in it seasoning sachets.
On a day when the market almost touched fresh record highs, the closing figures presented a very different story than what transpired through the session.
Sharp selling in oil marketing companies (OMCs) and a selloff in midcaps, led by a fall in Jubilant Foodworks, dragged benchmark indices lower, with the Nifty ending almost flat, while the Sensex ended with marginal gains.
As mentioned above, midcaps ended the session with losses of over half a percent. The movement followed the index’s stellar rally in the past few days, and there was profit booking.
Additionally, after the Finance Ministry reportedly told OMCs to bear the next set of oil price hikes, investors turned wary of stocks in the sector. Index majors, IOC and BPCL, were among the top losers on the Nifty.
"Marginal uptick in IIP numbers and anticipation of improvement in WPI provided strength to the domestic market. But volatility emerged as market (index) reached near the all-time high, which pulled the index to close negative while FIIs continue to be a net seller," Vinod Nair, Head of Research, Geojit Financial Services, said in a statement.
The 30-share index closed up 27.75 points at 32,186.41, while the Nifty saw a sharp correction, especially after it touched intraday high of 10,131— just five points away from record closing. The index ended lower by 13.75 points at 10,079.30. The market breadth turned negative as 1,023 shares advanced against a decline of 1,580 shares, while 156 shares were unchanged.
Among stocks, shares of Jubilant Foodworks’ lost over 6 percent intraday on Wednesday after Deutsche Bank raised concerns on bugs being found in Domino’s Pizza’s seasoning sachets.
The global financial research firm said that live bugs were found in the seasoning sachet and such an incident could potentially be serious for Domino’s franchise in India, CNBC-TV18 reported.
Furthermore, the reports of worms found in pizza reminded it of incidents such as worms in chocolate in case of Cadbury and lead in noodles faced by Maggi. It also highlighted a similar incident of pesticides in cola.
Divis Laboratories extended its gains from the previous session, jumping around 4 percent intraday.
Investors continued to bet on hopes of a better outcome from its unit’s inspection by the US FDA.
Shares of oil marketing companies (OMCs) saw selling pressure, down 6-8 percent intraday Wednesday, as the companies were likely to absorb an increase in oil prices.
The government may ask the state-run OMCs to further absorb the increase in oil prices, CNBC-TV18 reported, citing agencies.
“The government is unlikely to pass on a further rise in fuel prices to the consumers due to higher inflation,” it added.
Also, they are unlikely to roll back previous fuel excise duty hike due to fiscal constraints.
Reliance Industries saw strong up move, which actually offered support to the market during the sharp fall. The stock ended clocked fresh record on Wednesday.
State Bank of India (SBI) ended flat, with negative bias as SBI Life Insurance Co will launch next week what will be India's first billion-dollar initial public offering since 2010, paving the way for a record-setting year for IPOs in the country.
Meanwhile, Reliance Communications fell 4% after Ericsson India filed insolvency case.
SBI Life, a unit of top Indian lender State Bank of India (SBI), will open the share sale to the public on Sept. 20 and close it on September 22, according to a filing.
The shares, that will begin trading Oct. 3 will be sold in a price range of 685-700 rupees apiece, raising as much as 84 billion rupees ($1.3 billion) for SBI Life's main shareholders - SBI and BNP Paribas Cardif - which are paring their stakes.
Gold recorded a steep fall of Rs 500 in its prices to close at Rs 30,350 per 10 grams at the bullion market today, tracking a weak trend overseas amid tepid demand from local jewellers.
However, silver recovered by Rs 200 to Rs 41,850 per kg on scattered enquiries from industrial units and coin makers. Traders said, a weak trend overseas as concerns over North Korea and the US hurricanes faded, fuelling demand for riskier assets lifting global stocks to record highs, kept the pressure on the precious metal prices here.
Having said that, experts do see good times ahead for the market as well. We are in the midst of global rally and emerging markets are likely to lead the next leg of the rally, Atul Suri of Marathon Trends said in an exclusive interview with CNBC-TV18.
“I expect a 40% kind of an up move in global equities in the next 4 years and 70% of the 40% up move in global equities is likely to come from emerging markets,” he said.
He feels India is a leader in emerging markets currently and expect Nifty to be at levels around 17,000 in the next 4 years.(With inputs from PTI)