Sensex, Nifty edge lower at open; banks, auto stocks gain

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Equity benchmarks opened flat on Thursday tracking weakness in Asian markets. Markets are likely to be volatile in today’s session due to the expiry of August series F&O contracts. In early deals, Sensex was at 55,935 down 8 points or 0.02%, while the Nifty 50 fell 21 points or 0.13% at 16,613.

“Despite the rich valuations and the uncertainty surrounding Covid, markets continue to be resilient in the developed world, especially the mother market US. The S&P 500 and Nasdaq set another record yesterday,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Among emerging markets, India is the clear outperformer with Nifty returning 18.97% YTD. This is in sharp contrast to the poor returns YTD in other emerging markets like Indonesia and Brazil and negative returns in markets like Malaysia and the Philippines. An important factor that distinguishes India is the enthusiastic participation of retail investors who have been buying all stocks being sold by the FIIs who have been selling consistently during the last several days. Stability in the US market indicates that the market doesn’t expect any market-moving announcements from the Fed at the Jackson Hole symposium. Therefore, if the Fed chief makes any mildly hawkish statement regarding the normalization of monetary policy or tapering on August 27th, markets may respond negatively to that, Vijayakumar added.

Gainers & losers

Sectoral strand

Most sectoral indices on the NSE opened in the red. Nifty Bank, Nifty Auto, Nifty Pharma and Nifty Metal indices lost up to 0.5%.

On the upside, the Nifty FMCG index gained 0.24%, Nifty Realty rose 0.12% and the Nifty IT index was up marginal gains of 0.08%.

Broader market

Unlike benchmark indices, broader markets were trading higher. The BSE MidCap index advanced 120 points or 0.52% at 23,067 and the BSE SmallCap index was quoting at 26,055 up by 94 points or 0.36%.

The market breadth was in favour of the bulls as 1,400 shares advanced compared to 797 declined and 89 remained unchanged.

Global markets

Overseas, Asian stocks are trading mixed on Thursday, as US markets again surged to record highs. Meanwhile, South Korea’s central bank hiked interest rates.

South Korea’s central bank raised its policy rate on Thursday, becoming the first major Asian economy to do so in the pandemic amid concerns record-low monetary settings are overheating demand. The Bank of Korea’s monetary policy board raised the benchmark interest rate by 25 basis points to 0.75%. Wall Street gained ground on Wednesday, with chipmakers and financials helping to push the S&P 500 and the Nasdaq to record closing highs as investors look to the upcoming Jackson Hole Symposium.

The highly anticipated Jackson Hole symposium kicks off Thursday, and central bankers may provide updates on their plan around tapering monetary stimulus. The Federal Reserve has been purchasing at least $120 billion of bonds per month to curb longer-term interest rates and jumpstart economic growth as the pandemic wreaked havoc on the economy. Chairman Jerome Powell is slated to make remarks on Friday.

Johnson & Johnson said on Wednesday that its Covid Vaccine booster shot showed promising results in early stage clinical trials, significantly increasing virus-fighting antibodies.