Markets give up early gains; financials tank

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May 6, 2020 8:17 AM

A report by Jefferies shows that the benchmark Nifty in the last week of April had outperformed other global benchmarks such as Japan’s Nikkei 225, US’ S&P 500 and Hong Kong’s Hang Seng.

indian shares, indian share markets, fmcg stocks india, Indian stock marketMeanwhile, markets globally were soaring with Asian bourses extending the gains of Dow Jones’ previous day rally.

Indian shares gave up gains in the last hour of trade on Tuesday due to broad-based selling in banking, financial services and FMCG stocks. This came after a German top court said the European Central Bank’s bond-buying programme or quantitative easing programme did not respect the “principle of proportionality”.

The market perceived this development as negative for risky assets like equities. Within hours, the indices gave up gains on profit-taking. The 50-share index Nifty declined by 87.9 points or 0.9% to close at 9205.6, while the benchmark Sensex fell 261.8 points or 0.8% to close at 31,453.5.

The Nifty50, which had topped the 9,400 mark during the day’s trading session, erased its gains towards the last hour of the trading session.

While the markets started the day higher, supported by strong global cues, they underperformed in front of other global markets since they gave up their gains towards the end of the day. G Chokkalingam, chief investment officer, Equinomics Research and Advisory, said, “The markets declined on Tuesday because of some profit-booking since the underlying fundamentals have not changed much. It could be participants from the short to medium term booking profits.”

The markets have been anticipating a fiscal stimulus which would soothe the harsh economic impact that the Covid-19 pandemic has had. However, since no announcement or development has come, the general mood on the street has been dampened.

A report by Motilal Oswal Institutional Equities has said Nifty could witness another year of flattish earnings growth. “In the throes of an unprecedented global pandemic, FY21 has begun on a lacklustre note with India as well as several world economies in an extended lockdown. This has impacted the underlying demand-supply dynamics and is expected to have an adverse impact on the economy and corporate earnings. We have revised our FY21 Nifty EPS estimate downwards by 28% and now expect another flattish year of earnings,” it in its report.

Foreign portfolio investors (FPIs) continued to remain net sellers on Tuesday, pulling out $139.98 million from Indian equities, according to the provisional data on the exchanges. Meanwhile, domestic institutional investors (DIIs) also sold equities worth $131.5 million. FPIs, which were sellers in March and April, have continued selling so far in May. On the NSE, the F&O segment witnessed volumes worth Rs 10.08 lakh crore against the six-month average of Rs 14.21 lakh crore. The cash market saw volumes worth Rs 47,275.29 crore against the six-month average of Rs 40,898 crore.

Meanwhile, markets globally were soaring with Asian bourses extending the gains of Dow Jones’ previous day rally. Stock markets in Singapore, Taiwan and Hong Kong were up between 0.3% and 1%. Bourses in China and South Korea were closed on Tuesday. European markets also had a strong opening with bourses in the UK, France and Germany trading 1.2-1.5% higher.

A report by Jefferies shows that the benchmark Nifty in the last week of April had outperformed other global benchmarks such as Japan’s Nikkei 225, US’ S&P 500 and Hong Kong’s Hang Seng. The markets this week, however, have not been able to maintain their outperformance against other global markets.

Financials weighed the market down during the day’s trading session with Nifty Bank losing as much as 2.3% on Tuesday. The biggest losers on Nifty were SBI, Bajaj Finance, Britannia Industries, Asian Paints and Tata Motors down by 4.1%, 3.7%, 3.6%, 3.5% and 3.4% respectively. The biggest gainers, however, were Bharti Infratel, Mahindra and Mahindra, PowerGrid, ONGC and Reliance Industries — up by 3.6%, 3.2%, 2.8%, 2.6% and 1.9%, respectively. Sectorally, the biggest losers were Nifty PSU Bank, Nifty Bank, Nifty Financial Services, Nifty Pharma and Nifty Private Bank. Nifty Midcap and Nifty Smallcap were down by 0.7% and 1.26% respectively.

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