Markets jittery over Adani saga; IT, FMCG saves the day

on Thursday, Sensex It closed at 59,932.24, a jump of 224.16 points or 0.38%. The benchmark touched its psychological 60,000-mark in the early trading session of the day, however, eventually corrected. The Sensex has climbed for the fourth consecutive day this week.

On the other hand, the Nifty 50 closed at 17,610.40, down 5.90 points or 0.03%. The Nifty was struggling to maintain a steady momentum and fell further below 17,450 during the day. This will be the second consecutive decline in this benchmark.

Adani it’s turned off 20,000 crore FPO after the issue is fully subscribed. This wreaked further havoc in Adani’s shares and bonds.

Following Hindenburg Research’s report of the allegations, Adani Enterprises, Chairman, Gautam Adani said on Wednesday, “Given these extraordinary circumstances, the company’s board felt that it would not be ethically correct to proceed further on this issue.”

Adani announced to return the money of investors in FPO.

Adani shares have been witnessing a massive selloff since January 24, when the Hindenburg Report accused the group of fraud and stock manipulation. On Thursday, Adani Enterprises stock declined 26.5% and Adani Ports shares fell 6.13% after market hours. Other Adani stocks such as Adani Wilmar and Adani Power closed at 5% lower circuit, while Adani Total Gas, Adani Transmission and Adani Green Energy closed at 10% lower circuit.

said Shrikant Chauhan, head of equity research (retail), Kotak Securities. “Shares of Adani Group continued to slide as benchmark indices jumped sharply during the day before regaining lost ground on buying in IT and banking stocks. However, gains in power, power, oil & gas, and utility stocks got robbed as investors continued. Exit given weak sentiment. More than external factors, investor sentiment has been hurt by domestic mood.”

Besides this, Vinod Nair, Head of Research, Geojit Financial Services, said, “Despite a growth-oriented budget, fall in crude oil prices and a rally in global markets, the domestic market is unable to take advantage of the ripple effect of the Adani saga.” on investors. Furthermore, India’s premium valuations continue to underperform compared to other emerging markets, which are expected to pick up in the economy. Global markets are positive in the perception that rates are in the final stages of growth.”

Top gainers on the Sensex were – ITC up 5%, followed by IndusInd Bank up over 3%. HUL, Infosys, Wipro, HCL Tech and TCS were also on the list rising by 1.5% to 2.5%.

Top bears on Sensex in percentage terms were — NTPC, HDFC, Titan, Tata Steel, Power Grid, Bajaj Finance and HDFC Bank with losses of 1.5% to 2%. Titan and HDFC today announced their third quarter earnings.

In terms of sectoral indices, FMCG and IT fared better on the BSE with gains of around 2% each. Bankex also contributed with a gain of around 209 points. Bank Nifty had climbed more than 155 points. In contrast, the Oil & Gas and Utilities indices fell 2% and 4%, respectively, while the Metals index on BSE also fell over 187 points—becoming top laggards.

Ajit Mishra, VP Technical Research, Religare Broking said, “Thursday proved to be a muted session as the Nifty index moved in a narrow range and ended almost unchanged. Meanwhile, a mixed trend prevailed on the sectoral front. Participants took over where FMCG and IT made good profits while metal and energy majors were on the back foot.”

Meanwhile, at the interbank forex market, the Indian rupee weakened to a 3-week low on Thursday as Adani crisis rattled equities. Also, the rupee depreciated despite weakness in the dollar index. The local unit closed at 82.1725 against the dollar against its previous day’s close of 81.92.

Going ahead, Mishra said, participants were expecting some respite after the dovish tone from the US Fed, however steady decline in counters of Adani group with scheduled weekly expiry kept the tone negative for most of the session. Signs are pointing towards further consolidation in the index, hence we recommend maintaining a sector/stock-specific approach. Across sectors, IT, FMCG, and select auto look positive for us, while others may continue to trade mixed, so plan accordingly.

Technically, Chouhan said, Nifty hovered between 17450 to 17650 range and also formed an inside body candle on the daily chart indicating continuation of range-bound activity in near future. However, if the index trades above 17500 then a pullback rally is possible. Above this, it may move towards 17700-17750 levels. On the downside, fresh selling is possible only after breaking 17500 and below it, the index may retest 17380-17350 levels.

Disclaimer: The views and recommendations given above are of individual analysts or broking companies and not of Mint. We advise investors to do due diligence with certified experts before making any investment decision.