Sensex, Nifty log fifth straight loss; auto, bank and IT stocks drag

NEW DELHI: Equity benchmark indices Sensex and Nifty ended with losses on Wednesday as selloff continued on D-Street for the fifth session making it the longest losing streak in over two months. The markets were dragged by auto, metal, energy, banking and pharma stocks as IMF's cut of India's growth outlook dampened sentiments.

The IMF on Tuesday projected a slower growth rate for India with a downward revision of 0.3 per cent for both 2019 and 2020 saying its GDP will now grow respectively at the rate of 7 and 7.2 per cent, reflecting a weaker than expected outlook for domestic demand.

Analysts said that concerns over an economic slowdown, weak corporate earnings and IMF's downward revision of India's economic outlook weighed on the domestic market.


Heavy foreign fund outflow and weak monsoon were also hurting investor sentiment, analysts added. IMD had recently said that deficient rainfall was expected over half of India this season.

Sahaj Agarwal, Head of Derivatives, Kotak Securities said, "Nifty broke its recent bottom of 11460 and has been under pressure since then. On the downside trend support is seen at 11000-11100 levels; unless a strong reversal is seen there remains a chance of the same being tested. We expect volatility to remain high in the near term and the index to stage a strong recovery with support of 11000 levels. Midcap indices have been under pressure and currently trade near critical support levels; any upside momentum would indicate possibility of a strong reversal in the space."

Asian Paints was among the top gainers in the Sensex pack gaining 3.42 per cent on BSE after the company said its consolidated net profit after minority interest jumped 17.7 per cent year-on-year (YoY) to Rs 655 crore for the quarter ended June 30, 2019 compared with Rs 556.85 crore in the same quarter last year. The number beat ET Now's poll estimate of Rs 547 crore profit.

Investors are now keeping a close watch on Tata Motors, Bajaj Finance and Bajaj Finserv, who are scheduled to announce their June quarter results tomorrow, for further cues. Analysts expect volatility to persist in the coming sessions, as the markets are expected to be largely driven by the ongoing quarterly earnings season.

On the global front, Asian shares closed higher on prospects of fresh Sino-US trade talks. In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.1 per cent and Chinese blue chips climbed 0.8 per cent.

BSE Sensex closed 135.09 points or 0.36 per cent lower at 37,847.65 while NSE Nifty ended at 11,271.30, down 59.75 points or 0.53 per cent.

Market at a glance

In the 30-pack Sensex, 7 stocks ended in the green and 23 in the red with IndusInd Bank as the worst performer and Asian Paints the best. Bajaj Finance, Tata Motors, Tata Steel and Hero MotoCorp too joined IndusInd Bank on the losers list, slipping up to 4 per cent.

HUL, HDFC twins and HCL Tech were among other Sensex stocks that advanced.

The BSE Midcap index declined 1.48 per cent and the BSE Smallcap index ended 1.23 per cent lower underperforming benchmark Sensex.

BSE Metal index recorded losses of 2.48 per cent followed by Auto, Oil & Gas, Power and Realty index.

In terms of index contribution, HDFC twins, HUL and Asian Paints were the top support while RIL, Axis Bank, L&T and ICICI Bank were the top drag on Sensex.

Expert Take

Investors turned sellers on concerns that economy is moving through a slowdown phase. IMF lowered GDP growth forecast by 30bps for 2019 based on weak domestic demand outlook which fuelled a sell off in a market where sentiment is already hurt due to tax concerns. Mixed Q1FY20 results, outflow of foreign funds and weakening rupee to weigh on investor sentiments going ahead
-Vinod Nair, Head of Research, Geojit Financial Service