Sensex Falls 300 Points Tracking Weak Global Trends; Nifty Below 19,500

Amid caution in global equities after Fitch’s downgrade of the United States’ credit rating, Indian equity markets opened in the red for the second straight session on Thursday, dragged by banking, financial and IT stocks.

The BSE Sensex was trading 285 points or 0.43% lower at 65,497. Nifty50 was trading at 19,442, down 84 points or 0.43% at around 9.17 am.

Among Sensex stocks, UltraTech Cement, Bajaj Finserv, Maruti, HUL, Airtel, ICICI Bank, and L&T opened with cuts, while only Sun Pharma, NTPC, HDFC Bank, and Tata Motors opened with gains.

Shares of Mankind Pharma opened 9% higher after the company reported a 66% rise in first-quarter profit, boosted by sales growth.

Whereas, shares of IndiGo fell 4% despite the firm reported a consolidated net profit of Rs 3,091 crore for the quarter that ended June, compared with a loss of Rs 1,064 crore in the year-ago period.

On the sectoral front, Nifty Metal plunged 0.41%, and Nifty IT fell 0.30%. Nifty FMCG, Nifty Realty, and Nifty Financial Services also opened lower. In the broader market, Nifty Midcap 100 rose 0.18%, and Nifty Smallcap 100 gained 0.29%.

Experts Take

“GDP growth in the US is strong and inflation is coming down. 80% of US companies have posted better than expected quarterly results. The Fitch downgrade doesn’t alter this significant macro construct. The sentimental impact of the rating downgrade will likely fade away soon,” V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.

The valuations in India continue to be rich from the short-term perspective, but fair for long-term investors. Weakness in the market may be used to slowly accumulate high-quality stocks which have corrected, Vijayakumar added.

Deepak Jasani, Head of Retail Research at HDFC Securities, said, “As long as the down gap at 19,705 is not filled, bullish action may get postponed. On down moves, the 19,202-19,303 band could provide support.”

Global Markets

Asian markets edged lower on Thursday, following a slide in Wall Street equities overnight, after Fitch cut the US top-tier credit rating to AA+ from AAA-, citing fiscal deterioration.

Japan’s Nikkei 225 fell 1.04%, while China’s Shanghai Composite declined 0.2%. South Korea’s Kospi fell 0.45%. Meanwhile, in the US, the Dow Jones Industrial Average fell 0.98%, the S&P 500 lost 1.38%, and the Nasdaq Composite dropped 2.17%.

FII/DII Trade

Foreign institutional investors (FIIs) sold Rs 1,878 crore worth of shares on a net basis on Wednesday, while domestic institutional investors (DIIs) offloaded Rs 2.23 crore of equities, as per provisional NSE data.

Crude Oil

Oil prices rose slightly in early Asian trading on Thursday, as markets weighed bullish US inventory data on Wednesday and a likely extension of OPEC+ output cuts against the fallout of Fitch’s downgrade of the US government’s top credit.

Brent crude futures rose 6 cents, or 0.07%, to $83.26 a barrel, while US West Texas Intermediate crude climbed 2 cents, or 0.02%, to $79.51 a barrel.

Rupee Weakens

The Indian rupee fell 5 paise to $82.72 against the US dollar in early trade, on the back of a selloff in US equities following the downgrade of the US credit rating.