Sensex, Nifty decline in early trade as power, metal stocks drag markets lower

Equity benchmark indices Sensex and Nifty declined in early trade on Thursday, dragged down by selling in power and metal stocks amid a broad sell-off across Asian markets.

Besides, elevated crude oil prices and firm US bond yields weighed on investors’ sentiment.

The 30-share BSE Sensex plunged 678.90 points, or 0.92 per cent, to 73,030.79 in the morning trade. The 50-share NSE Nifty declined 250.90 points, or 1.10 per cent, to 22,568.10.

Among the Sensex constituents, PowerGrid, Bharat Electronics Ltd, Maruti Suzuki India, Tata Steel, Mahindra & Mahindra, HDFC Bank, Asian Paints, Adani Ports, NTPC, Trent, Bajaj Finserv, IndiGo and Hindustan Unilever were the major laggards.

Eternal, however, rose over 2 per cent after the parent entity of Zomato and Blinkit, on Wednesday reported a consolidated net profit of Rs 125 crore for the September quarter, nearly doubling from Rs 65 crore a year ago, on robust revenue growth.

Bharti Airtel, Infosys and HCL Technologies also traded higher.

“The recent market trend has been the outperformance of large-caps relative to mid-and small-caps. The broader market resilience in recent months has been more a function of liquidity than earnings,” said V K Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd.

He added that the latest September AMFI data also reveals this trend of increasing preference for mid-and small-caps over large-caps. This has created a paradox of overvalued mid and small caps, particularly the latter, coexisting with attractively valued large-caps.

“This paradox cannot continue for long and will get corrected. It appears that this is happening now. This trend is likely to sustain,” Vijayakumar added.

Asian markets were sharply lower, with South Korea’s Kospi declining 3.12 per cent, Hong Kong’s Hang Seng benchmark falling 3 per cent, Japan’s Nikkei 225 index losing 1.94 per cent and Shanghai’s SSE Composite Index slipping nearly 1 per cent.

US markets ended higher in overnight deals on Wednesday.

Brent crude, the global oil benchmark, rose nearly 2 per cent to USD 110.68 per barrel.

“Strong external headwinds in the form of elevated crude prices and high US bond yields are emboldening bears to build short positions in the market. This is the reason why the market is declining even on days of positive institutional- FII and DII- buying, like Wednesday,” Vijayakumar said.

Meanwhile, Foreign Institutional Investors (FIIs) bought equities worth Rs 1,022.32 crore on Wednesday, while domestic institutional investors (DIIs) also purchased shares worth Rs 1,614.32 crore, according to exchange data.

On Wednesday, the 30-share BSE Sensex fell 143.21 points to close at 73,709.69, while the broader NSE Nifty dropped 77.60 points to end at 22,811.35, marking their second straight day of losses.

-PTI