Sensex falls as traders take profits: key factors driving D-Street today

NEW DELHI: Profit booking at private banks and FMCG counters pushed benchmarks lower on Wednesday as weak global signals rattled investor sentiment on Dalal Street.

Steady decline in new Covid cases and rising recovery rates indicate that India is succeeding in bending the Covid curve. This paved the way for a gradual unlocking and therefore the unlocking trade is happening in the broader market, an analyst said.

But “with such outperformance, valuations in the broader market are also becoming a concern. With no near-term risks to the market, consolidation is likely in the near term with stock-specific action in response to the news. Given that the markets are overbought and overvalued, investors should exercise caution even when the markets show surprising resilience,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

How are the bluechips doing?
After opening in the red, benchmarks fell further. As of 1:44 p.m., ESB flagship Sensex was down 405 points or 0.78% at 51,530. Benchmark NSE Nifty was down 89 points or 0.57% at 15,486.

In the 50-pack of Nifty shares, Adani Ports was the biggest gainer, up 2.36%. , Coal India, Cipla, , NTPC, Eicher Motors, Power Grid and Shree Cements were among the other winners.

Tech Mahindra was the biggest loser in the pack, down 3.10%. ITC, HDFC, Wipro, HCL Tech, Kotak Mahindra Bank, Grasim Industries, ICICI Bank and TCS were the other losers in the pack.


Good news

Covid pressure easing: After May’s chaos, India started June on a hopeful note with just over 1.25 lakh new Covid infections on Tuesday. The number of deaths also fell below the 3,000 mark to 2,795 deaths, according to official data.

Bad news

Yields increase: The 10-year US Treasury yield hit a more than a week high overnight, which could lead to an outflow of funds from emerging markets like India.

European inflation: Eurozone inflation jumped past the European Central Bank’s elusive target in May, compounding the communication problem for policymakers. Rising inflation is making savers worse off and the ECB is expected to respond by raising interest rates by 0%, Bavarian Finance Minister Albert Fueracker told the Bild daily in comments published on Wednesday.

Compliance with RBI Policy: The outcome of the upcoming policy meeting is also on the minds of investors who believe there could be negative comments as headline inflation has recently increased. However, most analysts believe the central bank will maintain the status quo.

Larger markets

Broader stock indices were trading higher, outperforming their major counterparts in morning trading. Nifty Smallcap rose 0.41%, while Nifty Midcap rose 0.60%. The largest index on NSE, Nifty500, fell 0.08%.

Gujarat Gas, Adani Total Gas, Emami, Sterling Wilson Solar, Route Mobile and Welspun India gained space, while IRCON International, SpiceJet, Avanti Feeds, Mindtree, Dalmia Bharat and Mphasis were under selling pressure.

Global Markets

MSCI’s stock gauge across the world was flat after setting an intraday record and closing on Tuesday. Its broadest index of Asia-Pacific stocks outside Japan rose 0.08% and the Japanese Nikkei added 0.36%.

Seoul’s Kospi gained 0.36% and Australian stocks rose 0.64%.

Chinese blue chips lagged as healthcare companies tumbled a day after the sector was boosted by China’s announcement of a third-child policy.