Sensex, Nifty fall in early trade; Adani stocks down up to 10%; Indus Tower rally 14%

Domestic equity indices kicked off the week lower tracking the global cues and intense FII selling. Negative news flow over Adani Group stocks further dampened the sentiments. Asian stocks were mostly lower in the early trade, whereas US stocks dropped over the weekend.

Street will be looking at the Reserve Bank of India’s (RBI) monetary policy meeting, which kicked off today, whose results will be out on Wednesday. Also, US Federal Reserve’s Chairman Jerome Powell will speak on Tuesday, which may guide the market over inflation cues.

At 9.20 am, the 30-share pack BSE Sensex was trading 223.2 points, or 0.37 per cent, lower at 60,618.68, whereas NSE’s Nifty50 was down 71.10 points, or 0.40 per cent, down at 17,782.95. However, broader markets bucked the trends in the headline peers as BSE midcap and smallcap index were mildly up. Fear gauge India VIX spiked over 4 per cent 15.03-level.

The index witnessed a roller coaster move during the week wherein the Nifty oscillated by 1,900 points as key events like Union Budget and US Fed meet unfolded. As a result, the weekly price action formed a piercing line bull candle, indicating a pause in downward momentum as buying demand emerged in the vicinity of 52-week EMA placed around 17,300, said ICICIDirect Reseach.

“Going ahead, we expect the index to consolidate in the broader range of 18,000-17,300 and form a higher base that would gradually pave the way to inch upward in coming weeks as the index has approached the maturity of price and time wise correction,” it said.

Among the Adani Group stocks, Adani Transmission was locked in the lower circuit of 10 per cent, whereas Adani Enterprises plunged 8 per cent. Adani Power, Adani Green, Adan Total Gas and Adani Wilmar were down 5 per cent each. Adani Ports shed up to 4 per cent during the early trade.

On a sectoral front, IT and metal counters were among the top laggards, whereas Nifty Pharma index dropped a per cent. Auto and realty stocks were also down. On the upside, Banking and media stocks were the only exceptions, trading in green.

Barring the Adani Group counters, Divis Labs, SBI Life Insurance, Tata Steel and Infosys dropped 2 per cent each, whereas HCL Tech, Wipro, UPL, Eicher Motors, Tech Mahindra and Asian Paints were down over a per cent each in the early trade.

Among the gainers, ITC jumped over a per cent to hit its new record high after strong performance in the December 2022 quarter. Axis Bank, State Bank of India and Hero Motorcorp rose about a per cent each.

The massive FPI selling in Indian markets impacted market sentiments. FPIs are selling in India and buying in cheaper markets like China, Hong Kong and South Korea where valuations are attractive. This short India and long other cheaper markets strategy has led to big underperformance of the Indian market, said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

“The Budget turned out to be far better than expected. But the market couldn’t hold on to the gains since the Adani stock crisis impacted sentiments. Banking stocks were impacted on fears of Adani exposure impacting banks. But the RBI message that the Indian banking system is healthy improved sentiments leading to a late rally in banking stocks,” he said.

In the broader markets, Nahar Polyfilms tanked over 11 per cent, whereas Nahar Spinning Mills were down 8 per cent. Both companies reported a muted performance in the December 2022 quarter. MCX was down 7 per cent, whereas Subex shed 6 per cent.

Among the gainers, Indus Towers surged 14 per cent, whereas Vodafone India hit an upper circuit of 10 per cent after the government converted its tax payment into equity shares. D-Link India and Swaraj Engineering rose up to 13 per cent. M&M Finance Services surged 8 per cent after strong Q3 performance.