Sensex, Nifty shed about 1% in early trade; IT, realty stocks drag

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Indian equity benchmarks opened lower on Thursday led by losses in index heavyweights HDFC twins, Infosys, ICICI Bank, TCS and Bajaj Finserv amid a mixed trend in global equities. At 10:30am, Sensex tanked 563.92 points or 0.93% to 59,788.90, while Nifty stood at 17,848.70, down 168.50 points or 0.94%.

“Rising inflation is emerging as a threat to the global equity rally, at least in the short-term. Consumer price inflation in the US has risen to a 30-year high of 6.2%, year-on-year, in October. Core inflation rose to 4.2%. These numbers are well above most forecasts. In China, too, producer price inflation has risen to 13.5%. This has the potential to spill over to global commodity inflation,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Sensing the danger ahead, the US 10-year yield rose to 1.57%. The Fed still believes that the spike in inflation is caused by supply-side issues and, therefore, is transient. But there are many who believe that the Fed is behind the curve and that the entrenched inflation will force the Fed to accelerate tapering and advance rate hikes. If this scenario is to unfold, there can be a sell-off and sharp corrections in markets, globally. So, investors have to watch this space, Vijayakumar added.

Gainers & losers

Sectoral strand

Most sectoral indices, barring the Nifty Metal, opened in the red. On the downside, Nifty Bank & Nifty IT indices tanked 0.57% each. While Nifty Pharma lost 0.31% and Nifty Auto, Nifty FMCG, Nifty Realty were down anywhere in the range of 0.13-0.16%.

Broader markets

Unlike benchmark indices, broader markets were trading flat. BSE MidCap index was trading with a mild loss of 1 point to 26,386 whereas BSE SmallCap index was quoting at 29,373 up by 56 points or 0.19%.

Bulls were in charge of the markets in early trades as 1,480 shares advanced compared to 871 declining and 105 remain unchanged.

Earnings today

Tata Steel, Balkrishna Industries, Bharat Dynamics, Engineers India, Godrej Consumer Products, HUDCO, Natco Pharma, NHPC, NMDC, Power Finance Corporation, Prestige Estates Projects, RailTel Corporation, Suryoday Small Finance Bank, and Zee Entertainment Enterprises and others are set to announce their September quarter earnings today.

Global markets

Overseas, Asian stocks are trading mixed on Thursday after data released overnight showed U.S. consumer inflation spiked in October.

Wall Street closed sharply lower on Wednesday as surging consumer prices curbed investor risk appetite and stoked worries of a protracted wave of red hot inflation.

Prices for U.S. consumers jumped 6.2% in October compared with a year earlier as surging costs for food, gas and housing left Americans grappling with the highest inflation rate since 1990. The year-over-year increase in the consumer price index exceeded the 5.4% rise in September, the Labor Department reported Wednesday.