Sensex, Nifty inch lower in early trade; FMCG stocks buck the trend

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Domestic benchmark equity indices opened tepid on Tuesday amid a mixed trend in Asian peers as investors look ahead to the release of Chinese August trade data. At 10:30 am, Sensex was at 58,104.09, down 192.82 points or 0.33%, while Nifty declined 54.65 points or 0.31% to 17,323.15. 

“Nifty heavyweights are now pulling the index to record highs on a sustained basis. Eighty Nifty stocks – RIL, HDFC Bank, Infosys, HDFC, ICICI Bank, TCS, HUL, Bajaj Finance – now account for 50.9 percent weightage in the index. These stocks, which are doing well are positively impacting the index disproportionately. On the other hand the five PSU energy stocks – ONGC, BPCL, Coal India, NTPC, IOC – have only a combined 3.2 percent weightage in Nifty even though they account for a large chunk of Nifty profits. This dichotomy explains the surge in the index and record market highs,”  said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

A positive development is the observation of some leading epidemiologists that the feared third wave may perhaps not happen and even if does, the impact will be insignificant since 50 percent of the population has already received one dose. Further lockdowns may not happen at all. This can turn out to be more fodder to the bulls. But the present state of market stability and the steady uptrend is unlikely to last long. High volatility is not far away, Vijayakumar added.

Gainers & losers

Sectoral strand

Most sectoral on the NSE were in the red. Nifty Realty, falling over 2%, was the top laggard followed by Nifty PSU Bank, Nifty Private Bank and Nifty Bank. Nifty IT, Nifty Pharma and Nifty Metal were down about 0.5% each. On the other hand, Nifty FMCG, rising nearly 1% was the only sectoral gainer.

Broader markets

The broader markets mirrored the gains in the benchmark indices. The BSE Midcap opened higher at 24,476 advancing 50 points or 0.21%. While the BSE Smallcap index rose 94 points or 0.34% to 27,561.

Market breadth was positive as 1,245 shares advanced compared to 816 declining whereas 108 remained unchanged.

Global markets

Overseas, Asian stocks are trading mixed on Tuesday as investors look ahead to the release of Chinese August trade data. The Reserve Bank of Australia is also set to release its rate decision. Markets in the US were closed on Monday for a holiday.