The broader markets outperformed the benchmark indices during the day’s trading session on Thursday’s monthly expiry. The Indian benchmarks Sensex and Nifty, amid a volatile trading session, ended their day flat on tepid global cues and concerns around the rising novel Coronavirus cases.
The benchmark Sensex was down by 26.88 points, or 0.08%, to close at 34,842.1. The 50-share Nifty was down by 16.4 points or 0.16% to close at 10,288.9. Conversely, the Nifty Midcap 100 index was up by 0.89% and Nifty Smallcap 100 rose 0.51%.
Market experts have stated that the midcap and smallcap indices have been outperforming the equity markets in the last few trading sessions due to an increase in retail participation. Sanjeev Hota, head of research, Sharekhan by BNP Paribas, said, “The last few months have seen significant retail participation, which tends to chase high momentum stocks which are usually smallcap and midcap. This could be an important factor that has caused the smallcap and midcap which could have driven the outperformance in the smallcap and midcap segment. Additionally, the broader markets which have fallen more than the benchmarks so they could be playing catch-up to the benchmarks.”
The Nifty Midcap 100 and Nifty Smallcap 100 so far this week have risen by 3% and 3.47%, respectively, but the Nifty has risen by 1.08% so far this week. However, it is unlikely that the broader market rally will sustain. “Whenever there is a liquidity driven rally, there is a chance that the flows go down to other segments such as smallcap and midcap as well. However, a liquidity driven rally is not sustainable as it could reverse suddenly and there could be a healthy correction,” said Sanjeev Hota of Sharekhan by BNP Paribas.
The markets globally remained volatile, with Asian markets seeing a weak trading session, with bourses in Hong Kong and South Korea declining by 0.5% to 2.27%. In contrast, the Shanghai Composite, China’s benchmark, was up by 0.3%. The Asian markets took their cues for US markets, where the Dow Jones in its previous trading session tanked by 2.27% on the fear of increasing Covid-19 cases anticipating the start of a second wave of novel Coronavirus cases in the world’s largest economy.
Stock markets in Europe were trading mixed on Thursday, with benchmarks in France and Germany up between 0.19% and 0.23%, respectively. However, the United Kingdom’s FTSE 100 was down by 0.2%. The Dow Jones Mini futures were down by 112.5 points at the time of press.
The Nifty saw a volatile trading session, swinging between gains and losses before giving up gains in the last hour of trade closing the session off the day’s lows. The Nifty during the trading session had touched the low point of 10,194.5. The equity markets were also impacted by the revised GDP projection by the International Monetary Fund (IMF), which predicted a contraction of 4.5% in India’s GDP for the fiscal year 2021. Earlier, the IMF had forecast growth of 1.9% for India during the same period. The IMF revised its projection because of the longer period of lockdown and slower than expected economic recovery.
Foreign portfolio investors have bought stocks worth $2.85 billion in total till June 23. On Wednesday, FPIs bought stocks worth $$232.4 million, provisional data shows; domestic institutional investors sold stocks worth $200.6 million.
ICICI Securities in its report stated that the rising Covid-19 cases can hurt equity flows. “Negative surprise on growth due to rising cases of COVID-19, fear of a second wave globally and limited fiscal stimulus so far will keep equity flows and risk assets under check for India,” said the brokerage in its reports. On the monthly expiry day, the futures and options segment witnessed volumes worth Rs 41.62 lakh crore, this is against the six month average of Rs 13.9 lakh crore.
The biggest losers on the Nifty were Asian Paints, Hindalco, Indian Oil Corporation, Eicher Motors, and HCL Technologies, down by 3.13%, 2.34%, 2.12%, 2.1%, and 2%. The biggest gainers were ITC, Hero Motocorp, Bajaj Finance, Kotak Mahindra Bank, and GAIL, up by 5.5%, 2.86%, 1.89%, 1.73%, and 1.68%. Sectorally, the Nifty IT, Nifty Realty, Nifty Metal, Nifty PSU Bank, and Nifty Media were the biggest losers.