After four days of small gains, expiry of weekly options contract of Nifty 50 and Bank Nifty brought back volatility on Dalal Street with the National Stock Exchange main index slipping 54 points and closing Thursday trade at 10981.05 down 54.65 points or half a percentage. It went below the 11,000 level which it had barely breached in the last four sessions.
The 30-share Bombay Stock Exchange Sensitive Index or Sensex closed at 37,104.28 down 166.54 points or 0.45 per cent.
In Nifty, the fall was largely contributed by some weakness in IT stock and few large industrials, which witnessed some profit-booking. Despite the weakness, financial sector stocks, especially PSU bank pack, remained stable. Among the large cap segment, ICICI bank and Indiabull housing stocks led the gainers.
Gains in the financial sector, especially in the housing finance companies, was led by the buzz in the market that it was the turn of the housing finance companies to receive some support from the government for the affordable housing segment.
Also, there was a buzz on the Street, that government might ask banks to reduce their stake in insurance companies to as low as 30 per cent. While this created pressure on some of the insurance companies’ stock, it was seen as a positive for banks as they would be booking massive gains by selling stakes in their insurance arms.
Auto companies, which had been moving up for last couple of days, witnessed selling at higher levels as any hope of a GST rate cut on four-wheelers faded, as the message coming from policy makers was that would not be financially viable for the government to let go of this lucrative source of revenue.
Despite the decline in broader market indices, sentiment on the Street was positive. The market breadth was positive with five stocks gaining for every four which traded in the red. If there is no major negative news from the international markets, the positive sentiment in the mid-cap segment is likely to continue for some more sessions.
The provisional net buying by Foreign Institutional Investors (FII), which was positive for Wednesday trading session, and which made the SGX Nifty (traded in Singapore) move up in the early part of the trade on Thursday, was largely due to the fact that two deals took place on Wednesday in which Foreign Portfolio Investors (FPI) were buyers. Had it not been for these two large deals, the FII number for Wednesday would have been in the negative.
Given the fact that a large placement happened in the Apollo hospital stock, with promoters selling their stake in a qualified institutional placement (QIP), there are chances that SGX Nifty would be positive in the early morning trade on Friday.
Companies from sector like cement and steel might see some up-tick as the railways has announced that it would not be levying the 15 percent busy-season charge on freight movement.
For in-depth, objective and more importantly balanced journalism, Click here to subscribe to Outlook Magazine