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    Market develops cold feet ahead of Q1 earnings; Sensex snaps 5-day winning run, tanks 346 pts

    Synopsis

    As many as 22 Sensex stocks closed lower with RIL as the worst drag.

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    The market breadth tilted towards the bears with losers outpacing gainers in the ratio of 1.2:1 on the BSE.
    Mumbai: Domestic benchmark indices snapped their five-day winning run to end the highly volatile session on a weak note, weighed down by weakness in world markets and continuous surge in new coronavirus, ahead of June quarter earnings season that will kick off tomorrow. Reliance Industries and IT majors - Infosys and TCS - were the top Sensex drags.

    “Markets were volatile as virus infections continued to mount and uncertainty increased regarding economic recovery. Volatility is expected to continue and investors need to maintain a stock-specific view on the market,” said Vinod Nair, head of research at Geojit Financial Services.

    BSE’s 30-share Sensex dropped 346 points to close at 36,329 while peer 50-share Nifty slipped 94 points to end at 10,706.

    “Immediate support for Nifty is coming near 10,630-10,560 zone and resistance is formed near 10,770-10,830 zone; it is still recommended to book profit on every rise,” said Rohit Singre, senior technical analyst at LKP Securities.

    As many as 22 Sensex stocks closed lower with the most-valued company RIL as the worst drag, down 1.46 per cent. Traders continued to book profits after the recent rally in the stock. The stock has more than doubled from its March lows and logged a new high earlier this week.

    Software major Infosys and TCS dropped 2.49 per cent and 2.30 per cent, respectively ahead of the latter’s June quarter earnings announcement on Thursday, on concerns that it is going to be a washout quarter for the industry in light of the Covid-19 pandemic and the subsequent lockdown.

    The market breadth tilted towards the bears with losers outpacing gainers in the ratio of 1.2:1 on the BSE.

    The selloff was not so intense in the broader market. BSE midcap and smallcap indices dropped 0.39 per cent and 0.43 per cent, respectively. BSE 500 index shed 0.76 per cent.

    BSE Realty index was the top sectoral loser as it dropped 2.05 per cent while BSE IT and BSE Teck shed 1.94 per cent each.

    Only two sectoral indices – BSE Metal and BSE Healthcare - closed higher, rising 1.70 per cent and 0.51 per cent, respectively.

    Private lender IndusInd Bank bucked the trend and jumped 5.06 per cent after media reports suggested that US-based hedge fund Route One Investment Company has initiated talks to increase its stake in the bank.

    Watch and jewellery company Titan slipped 2.43 per cent as analysts said the outlook for the rest of the year stays uncertain even as the company said it has reopened 83 per cent of its stores as at June 30.

    Private lender YES Bank advanced 1.36 per cent after its capital raising committee (CRC) of the Board of Directors approved raising funds by way of a further public offering (FPO).

    So far this month, foreign institutional investors have flip-flopped between being net buyers and net sellers of Indian shares. On an aggregate basis, they have net sold $120 million or Rs 920 crore of Indian equities so far in July.

    Markets at a glance
    • Sensex, Nifty snap 5-session rally
    • Sensex sheds 0.94% or 346 to close at 36,329
    • Nifty drops 0.87% or 94 points to close at 10,706
    • 22 of 30 Sensex stocks shed value
    • Top Sensex losers: Bajaj Fin down 4.45%, Asian Paints 3.37%, Bajaj Finserv 2.94%
    • Top Sensex gainer: IndusInd Bank up 5.06%, SBI 1.80%, HUL 1.45%
    • Market breadth turns negative: advance-decline ratio 1:1.2
    • Broader market drops less; BSE midcap down 0.39%, smallcap 0.43%
    • BSE Realty index top loser, down 2.05%; Prestige Estate down 5.1%, DLF 4.34%
    • BSE IT index down 1.94%; Aptech down 7.16%, HCL Info 4.92%
    • Titan drops 2.43% as analysts uncertain on outlook for rest of the year
    • YES Bank rises 1.36% after approval for fundraising via FPO

    Who moved my market
    • Q1 earnings jitters
    Software major Infosys and TCS dropped 2.49 per cent and 2.30 per cent respectively, ahead of the latter’s June quarter earnings announcement on Thursday. Indian IT firms will face the full impact of business disruption in the US and Europe due to the Covid 19-induced lockdown in the quarter to June, as analysts expect companies to report 5-10 per cent drop in revenue due to clients cancelling or putting off discretionary spending on technology in the three-month period.

    • Weak global equities
    Global stocks faltered on Wednesday, losing momentum after a five-day rally, as an increase in new coronavirus cases in some parts of the world undermined prospects for a quick economic recovery. Oil prices fell on oversupply fears, Reuters reported. MSCI’s All-Country World Index, which tracks shares across 49 countries, was flat after a five-day rally. The pan-European STOXX 600 fell 0.4 per cent, while MSCI’s broadest index of Asia-Pacific shares outside Japan inched up but was still lower than a 4-1/2-month high reached just on Tuesday.

    • Rapid rise in coronavirus cases
    For the sixth day in a row, India detected more than 20,000 new Covid-19 cases. India’s total coronavirus cases have increased to 7,42,417, after 22,752 new cases were detected in the last one day. The total number of deaths that have been reported so far has increased to 20,642.

    What to watch out for
    • The rapidly rising new coronavirus cases are a major cause of concern.
    • The direction of global markets will be closely watched as the domestic market tends to follow suit.
    • Progress on a domestic as well as overseas vaccine for Covid-19 treatment will be closely watched.
    • The June quarter corporate earnings, which start coming in later this week, will provide a better picture of the damage caused by the pandemic-induced lockdown.
    • The data of Index of Industrial Production (IIP), which is scheduled to be released on July 10 will be in focus.



    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

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    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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