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Benchmark equity indices pared most of their day’s losses in the second half of the trade on Wednesday after the BSE clarified that the new surveillance measure will be applicable only on securities worth Rs 10 or above and having a market capitalisation of less than Rs 1,000 crore. The exchange further added that the said framework is applicable to BSE exclusive securities in groups including X, XT, Z, ZP, ZY, Y. On the other hand, heavy buying in Tata Steel and Reliance Industries curb the downside.

Following the development, the BSE Sensex recovered nearly 359 points from the day’s low, to end 28.73 points down at 54,525. Likewise, the NSE Nifty index closed almost flat at 16282.25, up 2.15 points against the previous close.

Santosh Meena, head of research, Swastika Investmart, “BSE Circular is just an excuse for a correction in the midcap and smallcap space because this circular is limited to few BSE stocks and it won’t have any meaningful impact on the overall market. We are in a structural bull market where this kind of shakeout phase will be part of this journey. The correction in midcap and smallcap space was started at the beginning of August month and it gets momentum in the last two trading sessions which have taken out lots of weak hands therefore we may see a bounce back from here.”

Top gainers and losers

As many as 13 stocks in the Sensex pack ended the day in the green with Tata Steel gaining the most 3.86%. It was followed by NTPC (up 2.36%), Power Grid (up 2.06%), Reliance Industries (up 1.33%) and Bajaj Finserv (up 1.14%). On the other hand, Kotak Mahindra Bank, Bajaj Auto, Sun Pharma and ICICI Bank each declined over 1%.

Broader markets

The BSE Midcap index closed 0.22% lower at 22,710.96. On the other hand, the BSE Smallcap index settled 0.83% down at 25,849. Steel Authority of India emerged as the top gainer in the midcap index. The scrip gained 5.97% to Rs 134.80. Jindal Steel and Power, Bharat Forge and Max Financial gained between 3%-5%. On the other hand, Torrent Pharma, Whirlpool, GlaxoSmithKline Pharma and Crisil each lost over 3% during the day.

Vinod Nair, head of research, Geojit Financial Services said, “Following continued selling in broader markets and weak Asian and US peers, Indian indices shed its early gains, however, late recovery helped the market to close the day on a flat note. Measures taken by BSE to curb excessive price movement in smaller stocks nudged selling pressure in small and midcap stocks while a clarity from BSE on limiting its restrictions to penny stocks gave some relief. Mainstream sectors succumbed to profit-booking while metal, energy and infra sectors traded against the trend.”

Sectoral Indices

Among the sectoral indices on the BSE, the Metal index gained the most 3.51%. BSE Power, Energy, Oil & Gas, Basic Materials, Utilities, Capital Goods and Realty also gained between 0.16% and 1.35%. On the other hand, the BSE Healthcare, Bankex, Consumer Durables, Consumer Discretionary, Finance and Auto slipped between 0.30% and 1.35%.

Global cues

Asian markets ended mostly lower on Wednesday, even after the US Senate approved a $1 trillion bipartisan infrastructure bill. Meanwhile, investors are awaiting the US consumer inflation data later in the day for additional clues on the outlook for monetary policy. Seoul stocks ended lower as a record-high number of coronavirus cases dented investors’ sentiment. However, Japanese shares extended gains, supported by strong earnings from Bridgestone and other firms, while overnight gains of the Dow Jones index also benefited market sentiment.