Nifty50 has seen a correction of 6.2% since the start of May after witnessing a strong pullback rally throughout March.
Indian equities came under pressure on Thursday in the absence of any positive triggers. Rising Covid-19 cases in the country also hurt investor sentiment, as it is increasingly becoming clear that a return to normal is a long way off.
The benchmark indices were dragged down by marquee financial stocks. The 30-share index Sensex declined by 242.37 points or 0.76% to close at 31,443.38. The broader Nifty50 declined by 71.8 points or 0.78% to close at 9199.05.
On Thursday’s weekly expiry, the market witnessed strong volumes on the NSE with the F&O segment seeing a turnover worth Rs 22.79 lakh crore against a six-month average of Rs 14.2 lakh crore. The cash market saw a turnover worth Rs 75,030 crore against a six-month average of Rs 40,898 crore.
The market volumes were soaring on Thursday after GlaxoSmithKline (GSK) sold a 5.7% equity stake in Hindustan Unilever (HUL) through a block deal. Additionally, the weekly options expiry also added to the market volumes.
Foreign portfolio investors (FPIs) continued to remain buyers, pumping $2.5 billion into Indian equities. Domestic institutional investors (DIIs), too, bought $503.4 million worth of Indian equities.
A report by HDFC Securities Institutional Research said the street had not fully factored in the impact of Covid-19. “Many large-sector leaders have posted March 2020 earnings disappointment on an already muted expectation. Most notably, Hindustan Unilever’s volume and profit after tax decline in Q4FY20 — clearly points to an underestimation bias, which is likely to unravel as we move through the chunky part of earnings season in May 2020,” the report added.
Nifty50 has seen a correction of 6.2% since the start of May after witnessing a strong pullback rally throughout March. The benchmark continues to trade higher than its March 23 lows, which is making market experts cautious. Phillip Capital has maintained a cautious outlook on Indian equities. According to a report it published, the Nifty is trading at expensive valuations after the recent pull back rally. “Our current stance is of caution after the recent rally to 9,800-odd levels as Nifty is currently trading at expensive valuations of 18x/17x FY21/22 earnings,” Phillip Capital said in its report. The brokerage added that it may change its stance in case of a reasonable cure for Covid-19, meaningful fiscal stimulus by the Indian government, decline in the India cases and at least a time correction of the index.
Banking stocks remained under pressure with Nifty Bank declining 1% during the day’s trading session, dragged down by heavyweights such as HDFC Bank and Kotak Mahindra Bank. The biggest losers on Nifty were NTPC, BPCL, ONGC, Kotak Mahindra Bank and GAIL, down by 4.3%, 4.2%, 4.1%, 3.69% and 3.59%, respectively. The biggest gainers on Nifty were Bharti Infratel, IndusInd Bank, Adani Ports and SEZ, JSW steel, as well as Mahindra and Mahindra, which were up by 7.1%, 6.5%, 4.3%, 4% and 3.6%, respectively.
The biggest losers among sectoral indices were Nifty Financial Services, Nifty FMCG, Nifty Bank, Nifty Private Bank and Nifty Pharma. Broader market indices such as Nifty Midcap and Nifty Smallcap witnessed a mixed performance with Nifty Midcap declining 0.5% and Nifty Smallcap trading 0.5% higher.
Asian markets were trading mixed on Thursday with bourses in China and Hong Kong declining 0.3% and 0.6%., respectively. However, Taiwan’s Taiex and Singapore’s Straits Times were up by 0.6% and 0.7%, respectively. European markets were trading in the positive territory with stock exchanges in the UK, Germany and France trading 0.6% to 0.8% higher at the time of going to the press.