Though benchmark indices closed with marginal gains on Tuesday, small and mid-cap stocks witnessed heavy selling.
Overall, market sentiments remained weak today and there were only a few heavyweights which did most to scale Nifty upside, said Mohit Nigam, Head, PMS - Hem Securities.
BSE Sensex and NSE Nifty erased majority of the early gains in the second half after opening on a firm note, witnessing profit-booking. However, small-cap and mid-cap stocks market faced increased pressure throughout the day. Investors booked profit amid the rising concerns regarding the increasing number of cases of the Covid-19 Delta variant across the globe.
The BSE Sensex, which recorded a fresh all-time high of 54,779.66, closed at a record 54,554.66, up 151.81 points or 0.28 per cent. It hit an intraday low of 54,308.77. The Nifty 50, after recording a fresh high of 16,359.25, closed at 16,280.10, up 21.85 points or 0.13 per cent. It hit an intraday low of 16,202.25.
However, Nifty Midcap 50 was down 1.66 per cent while Nifty Smallcap 50 was down 2.26 per cent. The S&P BSE Midcap was down 0.85 per cent while the S&P BSE Smallcap was down 2.05 per cent.
Market breadth weak
The breadth of the market turned extremely weak, as advance to decline ratio stood at 1:3.2 on the BSE; 2,498 stocks declined in heavy selling, as compared to 761 stocks that advanced while 115 remained unchanged on the BSE. Furthermore, 546 stocks hit the lower circuit as compared to the 231 stocks that were locked in the upper circuit. Besides, 265 stocks touched 52-week high level and 33 touched a 52-week low.
Small-cap sell-off
According to S Ranganathan, Head of Research at LKP securities, "What started as a Sell-Off in Metal Stocks dramatically triggered a sell-off today in the Small-Cap Index after rallying for several months.”
According to Ranganathan, the indices at close were not reflective of the market mood as the breadth was very weak.
Bharti Airtel, Tech Mahindra, HDFC Bank, Kotak Bank and Mahindra & Mahindra were the top gainers on the Nifty 50 while Shree Cements, JSW Steel, Tata Steel, Hindalco and Powergrid were the top laggards.
Vinod Nair, Head of Research at Geojit Financial Services said, "Domestic market remained highly volatile as the early gains were trimmed off following selling pressure in global markets. Concerns over an early withdrawal of asset purchase programs by the Federal Reserve and US CPI inflation data to be released this week impacted global market.”
“However, strong support from large caps, especially from sectors like finance and IT, helped domestic main indices to end on a positive note. After a steady rally during the previous months, the small and mid-cap stocks are witnessing consolidation for the past few trading sessions while buying interest has shifted to large caps. The third wave of Covid and fall in liquidity will be a lethal combination for highly-priced mid & small caps,” added Nair.
Sharp slide in Metal, realty stocks
On the sectoral front, a majority of indices closed in the red. However, IT, financial services and healthcare indices gained. Metals, realty and PSU Bank stocks saw steep losses while auto, oil and gas, and FMCG too remained under pressure.
Nifty IT was up 0.87 per cent at closing. Nifty Financial Services was up 0.30 per cent. Nifty Healthcare Index was up 0.18 per cent
Meanwhile, Nifty Metal was down 2.77 per cent. Nifty PSU Bank was down 2.61 per cent while Nifty Realty was trading 2.02 per cent lower while Nifty FMCG was down 0.42 per cent. Nifty Auto was down 0.78 per cent and Nifty Oil&Gas was down 0.53 per cent.
The volatility index rose 0.79 per cent to 12.71.