Mid-day Mood | Indices hit day's low on crude surge; metals, PSU banks slump but pharma shines

Stock Market Today

The benchmark Indian indices pared minor early gains and slipped into losses, hitting their day's lows as of noon on September 6. The move in the domestic market mirrored the weak trends across global counterparts as a spike in oil prices to a 10-month high fanned concerns over a rise in inflation.

At 12 noon, the Sensex was down 93.93 points or 0.14 percent to 65,686.33, and the Nifty fell 29.20 points or 0.15 percent to 19,545.70. About 1,570 shares advanced, 1,467 declined, and 101 traded unchanged so far in the day.

Brent crude prices topped the $90-a-barrel mark overnight after major oil producers Saudi Arabia and Russia decided to extend their production cut till the end of 2023. Oil prices have been on the uptrend for the past seven sessions on the back of concerns of a supply shortage during peak winter demand.

"For the near term, there are mixed cues for the market. The negative factors are the surprising strength of the dollar index at 104.86, the resilient bond yields in the US (the 10-year bond at 4.26), and now, the Brent crude at $90. The spike in crude is a major macro concern. In this scenario, the FIIs are likely to continue selling in the cash market," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Stocks and sectors

The rise in oil prices has a direct bearing on profit margins of upstream oil companies and paint manufacturers. As it widens the profit margins for upstream oil companies, shares of ONGC, Oil India and Hindustan Oil Exploration Company inched 1-2 percent higher.

On the other hand, concerns of pressure on margin because of higher oil price-driven rise in manufacturing costs weighed on the shares of most paint stocks. Oil is a key raw material in the paints industry.

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Amid the lacklustre trend seen across markets, pharmacueticals emerged as the shining light, with shares of Sun Pharma, Divi's Labs and Cipla emerging as top gainers on the Nifty 50. Thanks to that, the Nifty Pharma index was also up around a percent.

On the flipside, a stronger dollar index and profit-booking  continued to drag metal stocks lower. Tata Steel and Hindalco were down around 2 percent each, the worst hit among blue-chip stocks. Likewise, the Nifty Metal index was down over a percent.

Selling pressure was also seen in PSU bank counters which pulled the Nifty PSU Bank index down by a percent. Most other frontline sectors like automobiles, banks and information technology also struggled with losses.

The small and mid-cap space took a breather from its outperformance of the large-caps, with the Nifty Midcap 100 and Nifty Smallcap 100 indices trading marginally lower.

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