Sensex adds 55 points, Nifty at 17,899, auto & banks gain

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Domestic benchmark equity indices opened flat with a positive bias on Tuesday amid Treasury yields as investors priced in the start of Federal Reserve tapering and elevated energy prices. In opening trades, Sensex rose 55 points or 0.09% to 60,133 while the Nifty 50 was quoting at 17,899 up by 44 points or 0.25%.

“There are conflicting signals that might influence the markets in the short-term. The rise in US 10-year bond yield is a negative for emerging markets like India, particularly if this trend sustains and gathers momentum, going forward. The rise in Brent crude to $80 is a negative for India’s macros,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

We are witnessing sectoral rotation in Indian markets now. Buying in banks and autos is a reflection of increasing confidence in the domestic economy theme. There is profit booking in IT since the segment has given excellent returns of 82% one-year return. Markets might consolidate for a while before making a decisive move, Vijayakumar added.

Gainers & losers

Sectoral strand

Sectoral indices opened mixed on the NSE. The Nifty Auto index rallied 0.55% followed by Nifty Bank gained 0.44%, Nifty FMCG index advanced 0.36% and Nifty Metal rose 0.19%. While the Nifty Pharma index was up marginally by 0.06%.

On the downside, the Nifty IT index slipped 0.91%, Nifty Media lost 0.71% and the Nifty Realty index declined 0.25%.

The volatility gauge India VIX spiked 0.72% to 18.18 levels.

Broader markets

Broader markets opened lower as the BSE MidCap index was trading at 25,156 down by 39 points or 0.16% while the BSE SmallCap index was flat at 27,987.

The market breadth was in the favour of bulls as 1,399 shares advanced compared to 858 declined while 129 remained unchanged.

Economy

The government will borrow Rs 5.03 lakh crore in the second half of the current fiscal to fund the revenue gap for reviving the pandemic-hit economy. It had said in a statement that the government raised Rs 7.02 lakh crore by issuing bonds, during the first half. Out of the gross market borrowing of Rs 12.05 lakh crore projected for FY 2021-22 in the union budget, 60% which amounts to Rs 7.24 lakh crore was planned to be borrowed in the first half. In the second half of FY 2021-22, the government is planning to borrow the balance of Rs 5.03 lakh crore.

Global markets

Overseas, Asian stocks are mostly trading lower on Tuesday, as various firms downgraded China’s GDP forecasts. Goldman Sachs on Tuesday slashed its China GDP growth expectations to 7.8%, down from the 8.2% previously forecast. Nomura also expected China’s GDP to grow by 7.7% this year, down from a previous forecast of 8.2%.

Profits at China’s industrial firms grew at a weaker pace in August from a year earlier. Profits rose 10.1% on year to 680.3 billion yuan ($105 billion) last month compared with a 16.4% gain in July.

In US, the S&P 500 and Nasdaq indexes ended lower on Monday with investors pivoting to value as tech shares, hurt by rising Treasury yields, weighed on equities in the quarter’s final week.