Markets opened gap up but could not sustain at higher levels and witnessed volatility to finally end the session with marginal gains. Nifty/Sensex both ended 46/226 points up (+0.3%/+0.4%) at 16,496/55,556 levels. However, heavy selling continued in midcap 100 and small cap 100, both down -0.9%/-1.8% respectively. Majority of the sectors remained negative. IT was top gainer - up 1.7%, followed by Financials and Oil & gas. While Media and Auto were top laggards - down -1.7%/-1.5% respectively. Metals, FMCG, Pharma, Private Bank, and PSU banks were down in the range of -0.1-1%. The volatility index, India VIX was down -2.4% at 13.69evels.After a week of sharp sell-off, global markets turned positive post the news that China reported no new Covid-19 cases for the first time since July. However, sentiments remained brittle as U.S. Fed is considering to start withdrawal of its extraordinary monetary stimulus and European manufacturing surveys pointed to a slowing global economic recovery in the face of the new Covid outbreak.
According to flash PMI survey data, Germany's manufacturing sector and France’s services sector, have slowed down in August compared with July,. Further, concerns about the spread of COVID-19's Delta strain and regulatory tightening in China continued, toned the markets.
Back home, following the suit, domestic indices too opened on positive note led by buying interest seen in quality large cap stocks. However, markets immediately came off and though it snapped last 2-day’s fall and ended in green. On stock specific front, HCLTech, TCS, NestleInd, Bajajfinserv and ONGC were top gainers while Grasim, Adaniports, M&M, Eichermot and Bajaj-Auto were top laggards.
Commenting on the market outlook, Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services said, "Going ahead, global cues will be closely watched for further market direction. With cases of Delta variant rising globally and many countries implementing fresh lockdowns, this is becoming the biggest worry for the markets at the moment along with the nervousness around US Fed taper talks. Investors will keenly watch out for U.S. Federal Reserve’s Jackson Hole symposium that opens on later in the week, where further hints on the timeline for asset tapering and interest rate hikes are expected. Nifty valuations at ~21x 12m forward EPS remain rich and thus consistent delivery on earnings expectations going ahead become crucial.
Market has been witnessing a rotation from mid to large caps - a phenomena we believe could continue as well in the near term given the sharp outperformance of the broader market in the last 18 months. From the long term perspective, the overall trend of the market remains positive led by the opening up of the economy, improving economic data points and pickup in vaccinations. Hence, investors can take advantage of the current volatility and build their positions from the medium to long term perspective."
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