Broader market under pressure; volatility index dips below 20

Benchmark indices erased all gains to close marginally lower on Friday.

Market started on a positive note, tracking global cues. Indices closed in the red amid broad-based selling. 

The BSE Sensex closed at 55,769.23, down 48.88 points or 0.09 per cent. It recorded an intraday high of 56,432.65 and a low of 55,719.36. The Nifty 50 closed at 16,584.30, down 43.70 points or 0.26 per cent. It recorded an intraday high of 16,793.85 and a low of 16,567.90.

Breadth favours decliners

The market breadth turned in favour of the decliners with 1,969 stocks declining on the BSE as against 1,367 that advanced while 130 remained unchanged. Furthermore, seven stocks hit the upper circuit as compared to the two stocks that were locked in the lower circuit. Besides, 69 stocks touched a 52-week high level and 41 touched a 52-week low.

Reliance, Infosys, L&T, Sun Pharma and HCL Tech were the top gainers on the Nifty 50 while Grasim, Ultratech Cement, Shree Cement, Hero Motocorp and Maruti were the top losers.

Ajit Mishra, VP-Research, Religare Broking Ltd, said, “Markets settled marginally lower in a volatile trading session amid mixed cues. Firm global cues triggered a gap-up start; however, profit-taking in the index majors from across sectors dragged the indices lower.”

“The recovery in the global indices combined with bargain hunting on the domestic front has helped the index rebound recently. However, this move lacks decisiveness due to lingering issues like inflation, geopolitical tension, etc. Going forward, apart from global cues, the upcoming RBI monetary policy meet and monsoon progress will be in focus for cues,” Mishra said. 

According to Neeraj Chadawar, Head-Quantitative Equity Research, Axis Securities, “Currently, the market is eyeing the central bank’s guidance on the interest rate trajectory. Both the RBI and Fed meetings are scheduled in June and we have to wait and watch how central banks influence theinterest rate trajectory to maintain growth and inflation dynamics.”

“Keeping these developments in view, we expect the market performance to remain range-bound in the near term, and a clear trend is likely to emerge only if volatility stays at lower levels for a longer time,” Chadawar added. 

Investors remain concerned over rising inflation and rate hikes.

On a positive note, the services sector in India has expanded the fastest in 11 years in May, the Purchasing Managers’ Index (PMI) survey showed. According to a report released on Friday, the PMI surged to 58.9 against 57.9 in April. However, the sector is facing an unprecedented rise in input prices. Also, job opportunities declined in the reporting month. 

IT in focus

On the sectoral front, all indices except Nifty IT and Nifty Oil & Gas, closed in the red with auto, metals, financials and consumer durables facing increased pressure.

Nifty IT was up  0.37 per cent at closing while Nifty Oil & Gas was up 0.17 per cent.

Meanwhile, Nifty Auto was down nearly 2 per cent. Nifty Metal, Nifty PSU Bank, Nifty Private Bank and Nifty Consumer Durables, each closed over 1 per cent lower. Nifty Bank and Nifty Financial Services closed 0.95 per cent and 0.71 per cent lower, respectively. Nifty Realty was down 0.96 per cent. Nifty Pharma and Nifty Healthcare Index were down 0.65 per cent and 0.72 per cent, respectively. 

Broader market under pressure 

Broader market also faced pressure.

Nifty Midcap 50 was down 1.6 per cent while Nifty Smallcap 50 was down 0.72 per cent. The S&P BSE Midcap was down 1.45 per cent while the S&P BSE Smallcap was down 1.16 per cent.

The volatility index softened 1.69 per cent to 19.98.

Published on June 03, 2022