The swing continued throughout the trading session with the stock markets moving frequently between gains and losses in Wednesday’s range-bound trade.
Indian equities on Wednesday paused their five-session rally closing the trading session flat with a negative bias. The lacklustre trading session came amid muted global cues due to rising US-China tensions and profit taking on the indices. The 30-share index Sensex was down by 58.81 points or 0.16% to close at 37,871.52. The benchmark Nifty50 was down by 29.65 points or 0.27% to close at 11,132.6.
Indian markets received mixed cues from stock markets globally with the European markets trading in losses at the time of press. Bourses in the United Kingdom, Germany and France were down by 0.8% to 1.17%. Additionally, Asian markets projected mixed results in trading, with China and Taiwan up by 0.37% to 0.61% whereas South Korea and Hong Kong declined by 0.01% to 2.25%. Rising coronavirus cases in different countries also contributed to volatility in the global markets.
The swing continued throughout the trading session with the stock markets moving frequently between gains and losses in Wednesday’s range-bound trade. The Nifty hit the low point of the day at 11,056.55 but recovered during the last hour of trade after the dip was bought into. The futures and options segment witnessed strong volumes during the day’s trading session, ahead of the weekly expiry. The turnover was worth Rs 19.98 lakh crore against the six-month average of Rs 14.49 lakh crore. Market experts stated that the markets remained range bound ahead of the weekly expiry due to tepid global cues. G Chokkalingam, chief investment officer, Equinomics Research and Advisory, said, “The markets ended flat today both on the basis of global cues and results that have come in. As anticipated, the results have been disappointing so far from many companies. Seeing such poor results in fine print added to woes and hence the markets were on a weak note.”
But some support came from the rally in banking stocks. The shares of Axis Bank rallied 6.68% to close at Rs 476. The surge in stock prices of the private sector lender comes after it delivered better-than-expected performance for Q1 FY2021. The bank reported a fall in loans under moratorium to 9.7% down from 25% to 28% earlier. Additionally, the overall business also showed some signs of recovery. Kotak Institutional Equities, in its report, said, “Axis Bank reported 19% year-on-year decline in earnings due to higher provision for bad loans. Impact on revenue growth was higher given the lower activity level. Net non-performing loans are at a four-year low. We are still in the early stages of recovery post a lockdown, which makes it harder to understand the near-term earnings. Business is recovering. Loan mix suggests a more resilient book to Covid on a relative basis. Maintain buy with Fair Value revised to `600 (unchanged) argument.” The Nifty Bank and Nifty Private Bank were the only sectoral gainers in Wednesday’s trading session — thanks to the movement in Axis Bank’s stock price.
The market experts, however, continue to believe that IT stocks will be better performers going ahead. Motilal Oswal Institutional Equities, in its report, said, “IT offers relative earnings comfort coupled with solid balance sheet, cash flow, RoE and payout metrics in such current volatile and disruptive times. We expect the IT sector’s relative earnings outperformance to sustain for the rest of FY2021. Also, the relative growth divergence (versus other sectors) should support re-rating of the IT sector.”
Foreign portfolio investors (FPIs) have bought Indian equities worth $298.1 million whereas domestic institutional investors sold stocks worth $95.7 million. The biggest losers on Nifty were Hero Motocorp, BPCL, Hindustan Unilever, Tata Motors, and Tata Steel down by 3.32%, 3.08%, 3.06%, 2.77%, and 2.49%, respectively. The biggest gainers were Axis Bank, Titan Company, PowerGrid Corporation, Zee Entertainment, and ITC up by 6.68%, 4.96%, 3.6%, 3.09%, and 2.44%, respectively. Among the broader markets, Nifty Midcap was up by 0.14% and Nifty Smallcap was down by 0.01%. Sectorally, the biggest losers were Nifty PSU Bank, Nifty Auto, Nifty IT, Nifty Realty and Nifty FMCG.