The Indian stock market, which opened after a day's break, couldn't repeat the stellar gains of August 30 as negative global cues dragged the benchmark indices lower by more than 1 percent lower on September 1.
The headline BSE Sensex ended 770.5 points, or 1.3 percent, down at 58,766.6, while the broader Nifty ended with a loss of 216.5 points, or 1.2 percent, at 17,542.8.
The market tracked Asian peers which ended lower after yet another negative day at the US and European bourses. Global markets continue to be spooked by the fears of aggressive rate hikes by the US Fed and the European Central Bank.
“Domestic indices moved in line with peers while prospects of higher rate hikes, elevated inflation and a slowing economy put pressure on stock markets around the world”, said Vinod Nair, Head of Research, Geojit Financial Services.
The Indian GDP numbers, which were lower than the consensus estimates, played on the minds of the investors who kept away from the equity market.
India's GDP growth surged to 13.5 percent in April-June from 4.1 percent in the previous quarter but fell short of Moneycontrol’s poll of 15 percent and also the Reserve Bank of India's forecast of 16.2 percent.
The growth in manufacturing activity during the second quarter, so, far indicates a strong recovery in the domestic market, Nair said. “Additionally, ongoing support from FIIs will obscure the weakness, helping domestic indices to stay resilient,” he said.
“Today was options weekly expiry as well so that only added to the volatility," said Ashish Gupta, a volatility trader and derivatives expert.
Tata Consumer Products, Bajaj Finserv, Asian Paints, Eicher Motors and Hero Motocorp were the top Nifty gainers, up between 1.4 and 3.6 percent.
Hindalco, Reliance, ONGC, TCS and SBI Life Insurance were among the biggest losers, down up to 3.9 percent.
Realty, PSU banks and auto were the only sectors that buck the downward trend on the Nifty. Nifty realty gained more than 1 percent, while PSU banks and auto were up half a percent each.
Nifty IT, pharma, financials and metals were the biggest drags. The IT index lost close to 2 percent, while others ended a percent lower each.
Stocks and sectors
On the BSE, the telecom index gained the most at 2.2 percent followed by realty, which was up over 1 percent. BSE industrials and capital goods gained close to a percent each.
BSE Energy was the top loser, sliding 2 percent followed by the oil & gas index, which ended lower by 1.8 percent.
The broader indices had on a mixed session. BSE midcap ended 0.6 percent higher, while the smallcap gained 0.5 percent.
The India VIX, which indicates the degree of volatility traders expect over the next 30 days, spiked 6.3 percent from 18.7 to 19.9.
A long build-up was seen in GMR Infrastructure, Tata Communications and Ashok Leyland, while a short build-up was seen in Zee Entertainment Enterprises, Piramal Enterprises Ltd and Hindaclo.
Among stocks, a volume spike of more than 300 percent was seen Tata Consumer and Navin Fluorine, while Whirlpool's volumes spiked more than 200 percent.
About 225 stocks touched their 52-week highs on the BSE. These included ABB, Ashok Leyland, Bajaj Auto, Bank of Baroda, ITC, KEI Industries, and TVS Motors.
Outlook for September 2
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd
Markets remained volatile as benchmarks followed weak global cues. The dismal manufacturing data from Europe and Asia worsened the sentiment and reignited fears of slackening global demand.
Markets failed to cheer the strong GST collections for August, with the hawkish Fed and prospects of rate hikes hitting continued to make investors nervous.
Technically, 17,450 will be an important support, while 17,700 can be the immediate hurdle for the market. Below 17450, the Nifty can slip to 17,350-17,300.
A fresh uptrend is possible only after a 17,700 range breakout. Above it, it can move up to 17,820-17,850.
Ajit Mishra, VP-Research, Religare Broking Ltd
Markets are showing tremendous resilience amid weak global cues and the recent consolidation should be seen as a breather to digest the gains. We thus recommend continuing with the “buy-on-dips” approach.
Banking, financials and auto top our list of preferred sectors, while the IT pack’s underperformance may continue to hurt.
Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas
The Nifty witnessed volatile action. It saw a swift up move in the previous session but there was no follow-through buying on September 1.
Throughout the day, the index oscillated around the key hourly moving averages and the 20-DMA. The Nifty formed an inside bar pattern on the daily chart.
The overall structure shows that the index is in a short-term consolidation for the last couple of weeks which is likely to continue. For the Nifty, 17200-18000 is the broad range for short-term consolidation.
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