Nifty Holds Above 22,650 Early; IT and Cement Stocks Drag, PSU Banks Gain
Equity benchmarks in India opened lower on Tuesday, continuing a cautious mood driven by elevated crude prices and geopolitical uncertainty in the Middle East. It is the sixth consecutive session of decline for the market, and the second straight fall this week.
The Sensex began trade at 73,484.38, shedding 122.37 points or 0.17 per cent. The Nifty 50 started at 22,708.80, down 44.40 points or 0.20 per cent.
As trading progressed, the Sensex hit a day's low of 73,210.76, which was 395.99 points or 0.53 per cent below its previous close of 73,606.75. The Nifty 50 touched a day's low of 22,653.20, down 100 points or 0.43 per cent from the previous close of 22,753.20.
The broader market offered some relief. The Nifty Smallcap 100 index advanced 1.6 per cent, while the Nifty Midcap 100 index gained 0.54 per cent.
Sector-wise, IT, cement and oil and gas counters witnessed selling in early trade. The Nifty IT index declined more than 1 per cent, the Nifty Cement index dropped 0.98 per cent and the Nifty Oil and Gas index slipped 0.53 per cent. On the flip side, PSU bank, pharma and healthcare stocks saw buying. The Nifty PSU Bank index climbed 0.68 per cent, the Nifty Pharma index rose 0.44 per cent and the Nifty Healthcare index went up 0.39 per cent.
On the currency front, the rupee opened 2 paise firmer at 95.17 against the US dollar, compared with its previous close of 95.19.
Market participants pointed to Brent crude staying above 114 dollars per barrel and the US 10-year bond yield around 4.97 per cent as persistent challenges for the near term.
Analysts say foreign investors are likely to keep a risk-off stance in the current tough economic climate. However, improving corporate fundamentals, visible in second-quarter earnings, and strong domestic fund flows are expected to keep supporting the market.
According to analysts, the Nifty 50 may attempt a recovery near 22,690, though weakness is also expected. As long as the index stays above 22,630, the bias remains positive, with targets of 23,000 and 23,500. Volatility could rise in the 22,800 to 22,900 range. If the index fails to hold above 22,630, a fall toward 22,250 to 22,000 is possible, although a major correction looks less probable.
On Monday, FIIs were net sellers, offloading shares worth Rs 1,462 crore. DIIs continued buying for a tenth straight session and purchased shares worth Rs 2,609 crore.
Overnight, US markets closed in the green, with the S&P 500 up 0.7 per cent and the Nasdaq up 0.82 per cent. Asian markets showed a mixed performance in early trade.
Investors are advised to remain alert, as weekly and monthly derivatives expiries may increase market swings. Focus will also stay on the US Federal Reserve's monetary policy meeting and the ongoing second-quarter results.