Midday Mood | Auto, oil & gas drag Nifty below 22,000; mid, smallcaps extend losses

Frontline indices the Sensex and the Nifty traded with sharp cuts on March 15, pulled down by oil & gas, auto and PSU banking stocks and continued selling in mid and smallcaps as mutual fund started sharing the outcomes of the stress test.

At 11.25 am, the 30-pack Sensex was down 563.67 points, or 0.77 percent, at 72,533.61, and the 50-stock Nifty was down 196.40 points, or 0.89 percent, at 21,950.30. About 1,116 shares advanced, 2,098 declined and 74 were unchanged.

The Indian market mirrored the global sentiment, as Wall Street's key indices settled lower on renewed concerns about the Federal Reserve putting off its first interest rate cut to much later than March.

The broader market, too, traded lower, with Nifty smallcap 100 and Nifty midcap 100 dropping around 1.5 percent each, as the stress test disclosures for small and midcap funds trickled in.

The Association of Mutual Funds in India had asked mutual funds to conduct stress tests and publish the result on their websites as well that of AMFI, once every 15 days starting March 15.

Sectoral Trends

All sectors but FMCG traded in the red, with Nifty oil & gas, PSU bank and pharma losing up to 3 percent. Nifty FMCG traded flat.

Oil marketing companies’ stock fell after the government cut the pump-end prices of petrol and diesel by Rs 2 a litre across India.

Fundamental View

"If there are clear signs of stress there can be regulatory action by the SEBI, which will impact sentiments in the broader market. Even without stress tests one thing is clear: the broader market valuations are expensive and in some pockets valuations are frothy. This is clearly unsustainable," said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Even when prospects for certain sectors are good, valuations have run ahead of fundamentals. Low floating stock in many segments has resulted in prices shooting up. Investors should understand that high quality largecaps with good growth prospects are available at fair valuations, he said.

Technical View

The Nifty can find support at 22,000 followed by 21,900 and 21,850. On the higher side, the resistance is at 22,200 followed by 22,250 and 22,300.

"Traders are advised to lighten their overnight positions as global markets are also becoming volatile. Investors can watch the lower levels for fresh investment for the long term," said Deven Mehata, Research Analyst, Choice Broking.

If the Nifty ends the day below the strong support of 21,850, it can slide further to 21,530, Mehata said.

Key Nifty gainers

Bajaj Finance, UPL, Britannia Industries, ITC and Bharti Airtel

Key Nifty losers

BPCL, Coal India, NTPC, ONGC and Hero MotoCorp

Key Sensex gainers

Bajaj Finance, ITC, Bharti Airtel and Bajaj Finserv

Key Sensex losers

NTPC, M&M, Tata Motors, Wipro and SBI

Stock moves

Zomato: Shares surged 3 percent but pared most of the gains as the day progressed. Domestic brokerage Kotak Institutional Equities is bullish on Zomato, as its quick-commerce arm Blinkit adds new categories to its platform to achieve higher average order value, better unit economics and customer loyalty.

Biocon: The stock fell over 4 percent after subsidiary Biocon Biologics' India-branded formulation business was acquired by Eris Lifesciences, a chronic therapy-focused drug firm, for Rs 1,242 crore.

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