Sensex falls 260 points dragged by banks and auto stocks

NEW DELHI: Benchmark indices were flat as mixed global cues kept investors on the sidelines on Thursday. IT, media and realty stocks saw buying interest while auto, FMCG and metals saw profit booking.

Asian markets followed US equities and opened lower on Friday over growing anxiety regarding spread of the highly contagious Delta variant of the coronavirus globally which could hamper the overall economic recovery.

“How deep the downtrend will depend on institutional behaviour and the retail investor response. The latter is a powerful market determining factor now. Without a doubt, the valuations are excessive and there is room for markets to correct significantly. 'Buy on dips' may not prove to be a good strategy now. Profit booking and increasing the cash component in the portfolio are advisable,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

How are blue chips doing
After opening in the red, benchmark indices fell further. At 9.37 am, BSE flagship Sensex was down 260 points or 0.49 per cent to 52,309. NSE benchmark Nifty fell 71 points or 0.45 per cent to 15,657.

In the 50-share pack Nifty, Tata Steel was the biggest gainer, up 1.64 per cent. JSW Steel, Dr Reddy’s Labs, Cipla, Divi’s Labs, Adani Ports, Sun Pharma and Bajaj Finserv were among other gainers.

Axis Bank was the top loser in the pack, down 1.37 per cent. Eicher Motors, TCS, HDFC, ICICI Bank, Shree Cement, IndusInd Bank, HDFC Bank, Bajaj Auto and Reliance Industries were other losers in the pack.

Factors driving markets
Good news
Yields drop further: Foreign investors flocked to the safety of bonds overnight with 10-year U.S. Treasury yields reaching levels not seen since February. Overnight, the yield on 10-year Treasury notes was down 2.8 basis points to 1.293 per cent.

Bad News
Dollar gain: The safe haven yen hovered near a one-month high at 109.81 per dollar. The euro dipped to $1.1836. That left the dollar index, which tracks the greenback versus a basket of six currencies, slightly firmer at 92.423.

Job growth choppy: Data on Thursday showed the number of Americans filing new claims for unemployment benefits rose unexpectedly last week, an indication that the labour market recovery from the COVID-19 pandemic continues to be choppy.

Broader markets
Broader market indices were trading higher, outperforming their headline peers in morning trade. Nifty Smallcap was up 0.24 per cent while Nifty Midcap advanced 0.20 per cent. Broadest index on NSE, Nifty 500 was down 0.27 per cent.

Mphasis, Dhani Services, Tata Elxsi, Edelweiss Financial Services, Bharat Dynamics and Rain Industries were gainers from the space while APL Apollo, Sterlite Tech, Carborundum Universal, Concor, Coforge and Trent were under selling pressure.

Global markets
MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.9 per cent to 667.99, a level not seen since mid-May. For the week so far, the index is down 3.2 per cent, the biggest decline since early February.

Japan's Nikkei slid 2 per cent. Chinese shares were weaker too with the blue-chip CSI300 index off 1.2 per cent. Australian shares dropped 1.6 per cent, with stay-at-home orders in Sydney, the country's most populous city, tightened further to stop the spread of the Delta variant of the coronavirus.