Sensex drops 90 points amid mixed cues; expect consolidation, say analysts

Sensex drops 90 points amid mixed cues; expect consolidation, say analysts

NEW DELHI: Benchmark indices remain subdued even as some buying happened in auto and IT names but selling in financials and pharma dragged the market amid mixed domestic and global cues.

FII buying has been a mainstay in the current rally pushing it to record highs. Better than expected Q3 numbers so far has also helped the sentiments. However, analyst believe the market is likely to consolidate now.

“This has been a ‘buy on dips’ market for months now. Sustained FII buying has been the main catalyst behind this strategy. Of late, better than expected corporate results have been supporting this strategy. Nothing warrants a change in this strategy now. But the market is likely to move into a consolidation phase for the short-term since the big news regarding the US presidency is behind us and the milestone of 50,000 Sensex was reached,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

“A positive surprise is the continuous flow of excellent corporate results. This will take away some concerns regarding valuations. Sustained FII inflows can deter the bears from going short.”

Factors driving markets

  • Serum fire: Five people died as a fire tore through an under construction facility of Serum Institute of India in Pune but reports say it is unlikely to impact the Covishield vaccine making process.
  • Yields rise: US Treasury yields on the longer end of the curve rose along with inflation expectations on Thursday as the market eyed the prospect for additional debt supply under the new US administration.
  • Unemployment remains a concern: US weekly jobless claims decreased modestly last week as the pandemic continued to hammer the labor market.
  • ECB to keep rates low: The European Central Bank reaffirmed its pledge to keep borrowing costs at record lows on Thursday to help the economy weather the pandemic.

How are bluechips doing

After opening in the red, benchmark indices remained volatile. At 10 am, BSE flagship Sensex was down 88 points or 0.18 per cent to 49,536. NSE benchmark Nifty followed and slipped 10 points or 0.07 per cent to 14,581.

In the 50-share pack Nifty, Bajaj Auto that came out with its earnings was the biggest gainer, up 7.28 per cent. Tata Motors, Hero Moto, Eicher Motors, M&M, Maruti Suzuki and Adani Ports were among other gainers.

Axis Bank was the top loser in the pack, down 2.09 per cent. ICICI Bank, Tech Mahindra, HDFC Bank, Reliance Industries, Divi’s Laboratories, Coal India and Kotak Mahindra Bank were other losers in the pack.

Broader markets

Broader market indices traded with gains outperforming their headline peers in the morning trade. Nifty Smallcap added 0.77 per cent while Nifty Midcap climbed 0.47 per cent. Broadest index on NSE, Nifty 500 was up 0.16 per cent.

Future Retail, Apollo Tyres, Ashok Leyland, CEAT, Kajaria Ceramics and IDBI were among major gainers from the space while CanFin Homes, RVNL, Welspun Corps, SRF, Mphasis and Aarti Industries were under selling pressure.

Global markets

MSCI’s broadest gauge of Asia Pacific stocks outside of Japan was off 0.2 per cent at 722.49 points, a whisker away from its all-time high of 727.31 touched on Thursday. Australia’s benchmark index was down 0.2 per cent while Japan’s Nikkei eased 0.4 per cent.

Chinese shares started on the backfoot with the blue-chip CSI300 index down 0.1 per cent and Hong Kong’s Hang Seng was off 0.1 per cent.

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