Sensex and Nifty end flat amid volatility

Benchmarks closed flat amid volatility on Thursday. The market opened on a positive note, tracking global indices and extended first-half gains amid broad-based buying. Volatility persisted in the second half, with indices giving up all gains to close flat, witnessing selling pressure across multiple counters.

The BSE Sensex closed at 55,702.23, up 33.20 points or 0.06%. It recorded an intraday high of 56,566.80 and a low of 55,613.82. The Nifty 50 closed at 16,682.65, up 5.05 points or 0.03%. It recorded an intraday high of 16,945.70 and a low of 16,651.85.

Expanse favors decliners

Market breadth remained positive with 1,817 shares down on BSE versus 1,527 rising while 117 were unchanged. Additionally, 14 stocks reached the upper circuit compared to the five stocks stuck in the lower circuit. Additionally, 79 stocks hit a 52-week high and 49 stocks hit a 52-week low.

Vinod Nair, head of research at Geojit Financial Services, said: “Fear of an aggressive rate hike by the Fed has been the main reason for global volatility over the past few days. The Fed’s decision to remain less hawkish with a 50 basis point rate hike has minimized investor concerns, helping global markets rally. However, the domestic market pared its gains towards the end of the day following a sell-off in US futures contracts.

Central banks raise rates

Investors remained concerned about high inflation and the potential impact of high interest rates on growth and corporate earnings.

After the Reserve Bank of India’s Monetary Policy Committee (MPC) voted unanimously on Wednesday to raise the repo rate by 40 basis points from 4% to 4.40% with immediate effect, the US Federal Reserve in a bid to stem the worst inflation in 40 years, on Wednesday raised its key short-term interest rate by half a percentage point, in line with market expectations, this is the largest rate hike of interest since 2000.

Niyati Khandelwal, Head, Sales & Trading, Institutional Equities, Yes Securities said: “The Fed’s 50 basis point hike was widely expected given widespread pricing pressure within the US economy. In fact, several market participants were pricing in a 75 basis point rate hike, so yesterday’s move was seen as less aggressive than expected.

“Meanwhile, the Fed also presented a plan to reduce its asset purchases and its balance sheet. The policy language emphasizes controlling inflation, which leads to re-anchoring the trajectory of yields. In terms of implications for emerging market economies, a hawkish Fed and rising global inflation will force central banks to continue monetary policy normalization, and a higher cost of capital will dilute earnings momentum somewhat. in emerging economies like India, where the impact of rising input costs and rising interest rates will likely be most palpable in the second quarter of FY23,” Khandelwal added.

Ajit Mishra, Vice President – Research, Religare Broking Ltd, said markets stabilized almost unchanged during a volatile trading session, taking a breather from the sharp decline. The tone was optimistic at first, in reaction to the outcome of the US Fed meeting, which was in line with market expectations. However, the gains slumped as the session progressed.

“With all the major events behind us, the focus would shift back to earnings and upcoming macro data,” Mishra said.

Elsewhere, India’s services sector recorded strong growth in May, with the Purchasing Managers’ Index (PMI) jumping to 57.9 in April from 53.6 in March. This is the fastest expansion since last November. Besides, the employment scenario also improved in April.

Tech Mahindra, Hero Motocorp, Infosys, HCL Tech and Tata Steel were the main winners of the Nifty 50 while IndusInd Bank, Britannia, Sun Pharma, Tata Consumer and Nestle India were the main losers.

Computer, metal, autofocus

On the sector front, while IT, autos and metals concentrated, real estate, pharmaceuticals, banks and consumer staples lagged.

Nifty IT closed more than 2% higher. Nifty Metal and Nifty Auto rose 0.62% and 0.42% respectively.

Meanwhile, Nifty Realty closed nearly 2% lower. Nifty Pharma and Nifty Healthcare Index fell 0.77% and 0.84% ​​respectively. Nifty PSU Bank was down 0.71% while Nifty Private Bank was down 0.40%. Nifty FMCG was down 0.57%.

Larger clues

Looking at the broader indexes, Nifty Midcap 50 was up 0.48% while Nifty Smallcap 50 was down 0.50%. The S&P BSE Midcap was down 0.21% while the S&P BSE Smallcap was down 0.32%.

The volatility index fell 7.24% to 20.29.

Published on

May 05, 2022

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