Sensex, Nifty consolidate on day one of expiry week; midcaps bleed, ITC gains

Driven down largely by underperformance among midcaps as well as PSU banks, the market began the expiry-laden week on a consolidation note, with the Nifty failing to end above 9450-mark. A rally in FMCG major ITC helped the indices stay in the green, failing which the Street would have ended flat.

The Street had witnessed a gap up opening of over 200 points on the Sensex. But these gains were soon given up by the market on the back of selling pressure on the stock.

The Nifty midcap index continued its corrective phase from the previous sessions and fell over a percent, along with pharma and PSU banks. Dish TV, Apollo Tyres, Century Textiles, and Aditya Birla Nuvo lost around a percent, while Jindal Steel, JSW Energy and Arvind gained the most.

The Nifty’s PSU banking index was lower by over 4 percent. A decline in State Bank of India as well as Bank of India post Q4 numbers spilled over to other public sector banks.

The highlight of the day, similar to previous sessions’ trend, were FMCG stocks that rallied over 3 percent on both the indices as investors cheered the benefits/relief for companies in the sector based on the GST rates.

The Sensex ended 106.05 points higher at 30570.97, while the Nifty closed up about 10.35 points at 9438.25. The market breadth was negative as just 892 shares advanced against a decline of 1,859 shares, while 165 shares were unchanged.

“FMCG held one end up, thanks to GST positivity, but with announced rates, largely on expected lines, and with F&O expiry approaching, buyers were looking for deeper bargains, allowing markets to slip. Global markets are likely to be cautious in the first half of the week with FBI testimony and FOMC minutes scheduled ahead,” Anand James, Chief Market Strategist, Geojit Financial Services said in a statement.

Among stocks, ITC was the highlight of the day. A rally in the stock based on GST’s impact helped the index survive the selloff. It also contributed a huge chunk to the Nifty and Sensex’s gain. The stock ended over 6 percent higher.

Meanwhile, United Spirits too saw a rally and ended 7 percent higher after a brokerage highlighted the lack of clarity in GST and that ethanol would not come under the GST—a positive development for the company.

Apart from the midcaps, a drag on the banking stocks led to the pressure on frontline indices. State Bank of India fell over 4 percent after analysts realized the proportion of bad loans among its subsidiaries was much higher than the standalone figure. The stock closed 4 percent lower.

Meanwhile, Bank of India witnessed heavy correction of over 11 percent after the lender posted dismal set of numbers. The slippages nearly doubled, while its asset quality deteriorated. The correction in these stocks spilled over to other PSU banks as well.

Among other sectors were aviation stocks, which fell due to GST-related developments as well as rise in crude oil prices. Jet Airways lost over 8 percent, while SpiceJet and InterGlobe Aviation fell 6.5 percent and 1.9 percent, respectively.

Going forward, the Street will look forward to earnings from index major Tata Motors. Investors will also wait and watch ahead of the derivatives expiry that is happen this Thursday.

“Participants are cautious mainly due to the global uncertainty at present, ignoring the domestic positives. But, it’s a short-lived event and will be over soon. We suggest limiting leveraged positions and suggest using further decline to accumulate stocks at good bargain. Nifty has immediate support at 9350 and any breakdown might result in further selling,” said Jayant Manglik, President, Retail Distribution, at Religare Securities in a statement.