Sensex opens 316 points lower, Nifty slips below 15,700-mark amid global sell-off; banks, metals drag

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Domestic equity benchmarks opened lower on Tuesday tracking a negative trend in global equities amid rising concerns over the spread of the delta variant of coronavirus. At open, Sensex lost 316 points or 0.64% to 52,214, while Nifty 50 declined 94 points or 0.06% at 15,657.

“The 725 points cut in the Dow yesterday, the worst in 2021, is a reflection of the risk-off in markets globally. Different reasons are attributed to this correction: The rising Covid cases in the US and UK due to the delta variant, inflation concerns, and concerns about growth coming below consensus expectations. It may be all these. The fact is that at high valuations when investors are sitting on big profits, any fear can trigger profit booking and corrections,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

This correction is good for the markets. In the absence of corrections, the excessive valuations will render the inevitable crash very severe and painful. A major correction is unlikely in India since we have already corrected a bit from the recent record high. Investors may opt for the safety of performing sectors with earnings visibility like IT, pharma, metals, cement, capital goods, and large financials, added Vijayakumar.

Gainers & losers

Sectoral strand

Sectoral indices opened mix as Nifty FMCG index was up 0.19%. On the other hand, Nifty Bank declined 0.87%, Nifty Metal index lost 0.72%, while Nifty Pharma, Nifty IT and Nifty Auto were down in the range of 0.06-0.11%.

Broader markets

Broader markets were trading with losses as the BSE MidCap index slipped 0.39% to 22,906, while the BSE SmallCap index retreated 0.18% to 26,334.

The market breadth was also weak as 963 shares declined on the BSE, while 807 shares and 481 remained unchanged.

Earnings today

Bajaj Finance, Asian Paints, ICICI Prudential Life Insurance Company, Syngene International, ICICI Securities, CRISIL, DCM Shriram, Shyam Metalics And Energy, Jubilant Ingrevia, TV18 Broadcast, Network 18 Media & Investments, Newgen Software Technologies, India Tourism Development Corporation, JSW Ispat Special Products, Thirumalai Chemicals, Reliance Industrial Infrastructure, Mangalam Organics, Moschip Technologies, Rane (Madras), Mold-Tek Technologies and others are scheduled to announce their quarterly earnings today.

Global markets

Overseas, Asian stocks are trading lower on Tuesday following an overnight tumble for stocks on Wall Street and concerns about the spread of the delta coronavirus variant. Markets in Indonesia, Malaysia and Singapore are closed on Tuesday for holidays.

On Tuesday, China kept unchanged its benchmark lending rate for corporate and household loans — the one-year Loan Prime Rate (LPR) held steady at 3.85% while the five-year LPR was also left at 4.65%.

Geopolitical jitters also resurfaced on Monday after the U.S., the U.K. and their allies said the Chinese government has been the mastermind behind a series of malicious ransomware, data theft and cyber-espionage attacks against public and private entities — including the sprawling Microsoft Exchange hack earlier this year.

U.S. stocks dropped sharply on Monday on concern a rebound in Covid cases would slow global economic growth. Covid cases have rebounded in the U.S. this month, with the delta variant spreading among the unvaccinated. Cases were already flaring up around the world because of the delta variant.