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Taking Stock | Stocks slide again amid weak global cues, European energy crisis

BSE Sensex was 168.08 points or 0.28 percent down at 59,028.91 while the broader Nifty ended the day with a loss of 31.2 points or 0.18 percent at 17,624.4.

September 07, 2022 / 04:27 PM IST

The Indian benchmarks slid again on Wednesday (September 7) amid weak signals from the global markets. The majority of Asian markets ended in the red, thanks to growing concerns about the energy crisis in Europe and the persistent lockdowns in China which have brought the world’s second-largest economy to its knees.

At close, the 30-pack BSE Sensex was 168.08 points or 0.28 percent down at 59,028.91 while the broader Nifty ended the day with a loss of 31.2 points or 0.18 percent at 17,624.4.

The US markets extended their losing run for the seventh successive succession on Tuesday, which by far, is the longest over the past few years. The European markets too opened on a weak note today and added to the lack of direction that Indian indices have been facing for the past few days.

US 10-year yield at 3.34 percent and dollar index above 110 are strong headwinds for capital flows to emerging markets like India.

“FPIs are buying in the cash market but hedging through increasing short positions in the derivatives market”, said Vinod Nair, Head of Research, Geojit Financial Services. “High volatility with downward bias is in store for the markets in the near-term”.

Asian stocks extended declines on Wednesday amid a jump in treasury yields and the dollar on expectations of aggressive monetary tightening by the Federal Reserve to tackle inflation. The investors are also anticipating the US Fed to give its summary of current economic conditions, also known as the ‘Beige Book’.

The latest economic figures indicate that the US central bank would continue to raise interest rates as, according to ISM's (Institute of Supply Management) US Non-Manufacturing PMI, the services sector expanded last month at a rate that was higher than anticipated, putting pressure on global markets, Nair added.

European and Asian equities came under pressure on Wednesday after worse than expected Chinese exports data added to concerns over the health of the global economy.

IndexPricesChangeChange%
Sensex62,293.6420.96 +0.03%
Nifty 5018,512.7528.65 +0.15%
Nifty Bank42,983.95-91.45 -0.21%
Nifty 50 18,512.75 28.65 (0.15%)
Fri, Nov 25, 2022
Biggest GainerPricesChangeChange%
HDFC Life586.6014.05 +2.45%
Biggest LoserPricesChangeChange%
Nestle19,529.35-206.10 -1.04%
Best SectorPricesChangeChange%
Nifty Midcap 10031587.70298.40 +0.95%
Worst SectorPricesChangeChange%
Nifty FMCG44102.60-139.20 -0.31%

“China's exports and imports lost momentum in August as surging inflation crippled overseas demand and new COVID curbs and heatwaves disrupted output, reviving downside risks for the shaky economy”, said Deepak Jasani, Head of Retail Research, HDFC Securities.

Tata Motors, Bajaj Auto, IndusInd Bank, M&M and Maruti Suzuki were the top losers on the Nifty as each lost between 1.2 to 2.6 percent.

Among the gainers, Shree Cements, UltraTech Cement, Adani Ports, Coal India and Britannia made the top of the list with gains of 1.6 to 7.0 percent.

Among the sectors, Nifty Pharma gained the most at 0.8 percent, while Nifty IT and FMCG edged higher by under 0.5 percent.

Nifty Auto was the top loser as it skidded by 1.2 percent while Banks & Financials lost close to 0.5 percent.

Stocks & sectors

On the BSE, the BSE Telecom index gained the most as it moved higher by 0.87 percent. It was closely followed by BSE Central Public Sector Enterprises (CPSE) index which gained just over 0.8 percent while BSE Healthcare and consumer durables edged higher by over 0.6 percent.

BSE Auto was the biggest loser, losing more than 1 percent, while BSE Power and BSE Utilities lost 0.9 and 0.75 percent each.

The broader indices performed better than the benchmarks with BSE Midcap moving higher by 0.46 percent while BSE Smallcap performed even better as it gained 0.73 percent.

The India VIX, which indicates the degree of volatility traders expect over the next 30 days, dipped slightly by 0.8 percent from 19.5 to 19.4.

A long build-up was seen in the stocks of Container Corporation, Vodafone Idea and First Source Solution while a short build-up was witnessed in Interglobe Aviation, Tata Motors and Bajaj Auto.

Among specific stocks, a huge volume spike of more than 3,000 percent was witnessed in Container Corporation while JK Cement saw a volume spike of close to 700 percent and the volume spike in Interglobe Aviation was ~550 percent.

Despite the uncertainty, about 180 stocks hit their 52 week high on the BSE which included Adani Enterprises, Ambuja Cement, Apollo Tyres, Coal India, East India Hotels, Hindustan Aeronautics, M&M Finance, NTPC and SBI Life.

Outlook for September 8

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd

Markets languished in negative territory through the session tracking weak global cues, as uncertainty over a possible global recession due to likely rate hikes going ahead continued to weigh on sentiment.

We are of the view that on the lower side 17500 would be the key support level while 17700 could act as a major hurdle for the bulls. Post 17700 breakout the index could move up to 17800-17850. On the flip side, dismissal of 17500 could increase the selling pressure. Below 17500 we could expect short term weakness till 17400-17300.

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas

The Nifty has been witnessing short term consolidation, where it has been swinging in both the directions. On September 07, it opened gap down however there was no follow through selling. The index attracted buying support near the psychological mark of 17500 as well as near the swing low of 17468. Thereon the index had a gradual recovery & moved up again towards the key hourly moving averages, where it had halted in the previous session. Structurally, the consolidation can continue further & any move towards 17700 is expected to attract another round of selling. Additionally, the selling pressure can aggravate once the level of 17500 is breached on a closing basis.

Ajit Mishra, VP - Research, Religare Broking Ltd

Markets ended marginally lower in a volatile trading session amid mixed cues. The Nifty index opened with a down gap, tracking feeble global cues however buying in the select index majors helped the index to pare losses as the day progressed. Finally, it closed at 17,624; down by 0.2%. Most of the sectoral indices traded in line with the index however buoyancy on the broader front kept the participants busy.

Markets have been maintaining a positive tone amid consolidation while the global indices are reeling under pressure. And, we feel the scenario may extend further. Participants should focus more on buying opportunities till the Nifty holds 17400 levels.

Disclaimer: The views and investment tips of investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
Gaurav Sharma
first published: Sep 7, 2022 04:12 pm