Financials Drag: Markets pare losses on buying in IT, FMCG, pharma

The markets ended lower on Monday tracking losses in index heavyweights HDFC Bank, ICICI Bank and Reliance Industries amid a weak global trend. After slumping over 570 points in mid-afternoon trade, the Sensex recovered some lost ground to end at 49,771.29, down 86.95 points, or 0.17%. The Nifty declined by 7.6 points (0.05%) to close at 14,736.4. Markets pared most of their losses because of buying in IT, FMCG and pharmaceuticals stocks.

The Nifty IT, Nifty FMCG and Nifty Pharma rose by 1.85%, 1.7%, and 1.57%, respectively. The global risk-off sentiment contributed to the rally in the defensive stocks. Moreover, IT stocks have been rallying ever since Accenture announced its second quarter results, which brokerages have interpreted as a positive for Indian IT companies. Nomura in its report said, “We see a positive read-across for India IT from Accenture’s Q2 results, which featured revenue growth ahead of consensus expectations, historical high bookings of $16bn, and demand trends are improving even in stressed verticals such as retail, travel, energy, and ACN sees a significant fast forward of transformation spends across client segments.”

The broader markets outperformed the benchmarks, with the Nifty Midcap 100 and Nifty Smallcap 100 rising by 0.82% and 0.03%, respectively.

Foreign portfolio investors sold stocks worth $104.9 million on Monday, according to the provisional data on the exchanges.

The markets were reacting mainly to the rising Covid-19 cases and partial lockdowns in certain states. As India witnesses the second Covid-19 wave, foreign investment banks, too, have expressed concerns while maintaining that the speed of urban vaccination should restrict the likelihood of fresh lockdowns.

Global markets witnessed a weak trend. While the benchmark in Germany was up by 0.18%, the markets in the UK and France were down by 0.08% to 0.2%. Asian markets in South Korea, Hong Kong and Japan were down by 0.1% to 2.07%. The markets were reacting to the US Fed’s announcement that it might end some emergency measures that had been put in place to deal with the pandemic.

The biggest losers on the Nifty were IndusInd Bank, Powergrid corporation, ICICI Bank, Tata Motors and HDFC Bank, down by 4.2%, 3.3%, 2.21%, 1.97%, and 1.57%. The biggest gainers were Adani Ports and SEZ, Tech Mahindra, Britannia, TCS and Sun Pharmaceuticals, up by 5.2%, 2.57%, 2.55%, 2.5% and 2.24%, respectively.