EconomyMarkets
Sensex gives up 800-point morning rally to close lower as IT stands alone and small caps slide
A strong open on Infosys and TCS faded by early afternoon. The Sensex ended 143 points down, the Nifty lost 78 points and smaller stocks fell more than 2%, even as Jio Platforms' record IPO drew more than twice the shares on offer on day one.
Key points
- The Sensex closed 143.21 points (0.19%) lower at 73,709.69, after rising more than 800 points in the morning.
- Nifty IT was the only sectoral index to end higher, touching an eight-month high of 32,348.
- The Nifty Smallcap 100 fell 2.37% and the Nifty Midcap 100 fell 1.58%.
Indian shares threw away a strong morning on Wednesday. The Sensex, up more than 800 points before noon on buying in software exporters, slid through the afternoon and closed 143.21 points, or 0.19%, lower at 73,709.69. The Nifty 50 lost 77.60 points, or 0.34%, to end near 22,811. It was the Sensex’s second straight fall, after Monday’s 876-point drop; markets were shut on Tuesday for Dussehra.
The damage was sharper beneath the headline indices. The Nifty Midcap 100 fell 1.58% and the Nifty Smallcap 100 dropped 2.37%. The India VIX, a gauge of expected volatility, jumped about 6%.
How the day turned
Trading opened on a firm note, helped by gains on Wall Street overnight and a 2.6% jump in South Korea’s Kospi. By about midday the Sensex was up 822.64 points at 74,675.54 and the Nifty up 217.65 points at 23,106.60. Infosys rose more than 3%, Tata Consultancy Services 2.6% and UltraTech Cement 2.3%.
The mood soured after lunch. By 2 pm the Sensex was 475 points below Monday’s close, and at 3 pm it was down 580 points at 73,272.28. A late recovery trimmed the loss. Information technology was the only sector to finish in the green: the Nifty IT index touched an eight-month high of 32,348, led by Infosys and TCS.
V K Vijayakumar, chief investment strategist at Geojit Investments, said in the morning that a good start to the September-quarter results season meant “some positive surprises are likely in the broader market”, but he expected trading to be “more stock-specific and results-sensitive”.
Stocks in the news
Results moved several shares. Eternal, the parent of Zomato and Blinkit, fell 4.5% to ₹305.65 ahead of its quarterly numbers, due after the close. SML Mahindra hit its 10% lower circuit after its quarterly profit fell 44.5% to ₹11.7 crore, and Vishal Mega Mart dropped 6% as its profit margin narrowed. Piramal Finance gained 4.6% to ₹2,038 after net profit rose 64.8% to ₹539 crore.
Foreign investors had sold shares worth ₹1,148.64 crore on Monday, while domestic institutions bought ₹3,201.19 crore. Brent crude traded above $110 a barrel, up about 1.4%.
Rupee and the Jio effect
The rupee began the day stronger. It opened at 94.78 against the dollar and touched 94.62, up 29 paise from Monday’s close of 94.91. Aamir Makda, currency analyst at Choice Broking, said, “This strength is primarily underpinned by foreign dollar inflows tied to the Jio IPO”, but added that “elevated oil prices remain a significant headwind for the domestic currency.”
Those inflows were visible in the ₹30,213 crore Jio Platforms offer, which was subscribed 2.22 times by 2:40 pm on its first day. Institutional buyers had bid for 6.72 times their quota, retail investors for 0.57 times.
What comes next
Eternal, Indian Hotels and Adani Green Energy are among companies reporting after market hours. The Reserve Bank of India is due to publish the minutes of its October policy meeting, where it raised the repo rate to 5.5%. The Jio issue stays open until Friday.