Equity market opened negative and cascaded deep in red for the first half of the session. It witnessed some recovery from lower levels in the second half of the session but failed to hold and closed the day in red for the 3rd consecutive day. NIFTY/Sensex shed 120/355 points (-0.8%/0.7%) to close at 15,632/52,199 respectively. The broader market sharply underperformed with both Nifty Midcap 100/Nifty Smallcap 100 falling by -1.4% each. Except FMCG (+0.14%) all other sectors ended in red. There was sharp selloff in Media (-2.6%), Realty (-2.5%), Metals (-2.3%) and banking & financials (-1.9%) which dragged the market down. India VIX inched higher by 4.1% to end at 13.21 levels led by the decline in the market.
Globally, markets continued to witnessed sell off with the Dow posting its worst day in nine months as COVID-19 deaths increased in the United States. US 10-Year Bond fell to 5-month low at 1.18%. European shares bounced back from their worst day of the year on Tuesday, but Asian stocks were down, as the fast-spreading Delta variant raised fears that further lockdowns that could upset economic recovery.
Back home, domestic factors remained positive on account improved Inflation data, good quarterly results and decline in oil prices by ~10% in the last couple of days. However, continued FIIs selling and weak global cues have had a negative impact in the domestic market.
Moreover, traders were seen booking profit on ahead of holiday on Wednesday to avoid global volatility. Banking, Auto, Metal and Realty stocks were major losers today on while on the other hand Cement and FMCG stocks recorded smart rally after ACC and Asian Paints announced impressive quarterly earnings. ACC's 2QCY21 result surprised positively on strong cost control. Moreover, coupled with a better pricing environment, this led to EBITDA/t of Rs 1,279 - the highest since CY10 - despite higher energy costs.
Commenting on the market outlook, Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services said, "Technically, Nifty formed a Bearish candle on daily scale and continued its lower highs - lower lows formation of the last two sessions. Key support now stands at around 15,500 zones while on the upside the index may face resistance around 15,800 levels."
"The Q1 result season has so far been in-line to better than expectations - leading to sector /stocks specific action - which is likely to continue in the near term as well. Also, it may provide investors with some insights into the scale of economic recovery through the management commentaries. Market has seen some sell off from its recent life highs on the back of weak global cues. While the declines are being bought into, follow up is missing at higher levels suggesting some fatigue creeping in.
Overall, equity markets have shown strong resilience even though it faces headwinds from the advent of a possible third COVID wave and persistent inflation readings prompting a potential rate increase. Restrictions this time around was localized and less stringent v/s the lockdown in CY20 leading to positive macro data points both on global and domestic front which is giving confidence to the investors of economic rebound. Hence it would be a tough fight between the Bulls and Bears in the coming days and one needs to remain watchful of possible movement in either direction," he added.
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