Sensex, Nifty snap 3-session losing streak as CAS recovery lifts indices

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Benchmark indices settled higher though high crude oil prices, geopolitical tensions and inflation concerns kept investors on edge | Photo Credit: Swapan Mahapatra

Equity benchmarks snapped a three-session losing streak on Thursday, with a sharp recovery in the closing auction session (CAS), helping the Sensex and Nifty finish in positive territory despite Brent crude prices climbing to around $102 a barrel.

The BSE Sensex gained 138.36 points, or 0.19 per cent, to settle at 74,902.59, while the Nifty 50 rose 46.30 points, or 0.20 per cent, to 23,477.80. Benchmarks remained volatile through the session, but late buying helped the index recover. Bank Nifty also saw a sharp spike during the closing auction session.

The recovery came against a cautious backdrop, with elevated crude prices, geopolitical tensions and inflation concerns keeping investors on edge.

Crude remains key concern

Vinod Nair, Head of Research at Geojit Investments, said the prospect of synchronised monetary tightening had strengthened as higher crude prices and prolonged geopolitical tensions reinforced concerns over energy-led inflation.

“Investors now await key US inflation data for cues on the rate trajectory,” Nair said, adding that rising global bond yields and concerns over a potential yen carry trade unwind amid expectations of a Bank of Japan rate hike and a stronger yen could keep capital flows into emerging markets under pressure.

Nair said the domestic market endured a choppy expiry-day session amid weak Asian cues, with investor focus closely tied to crude price volatility. While strong August equity fund flows and moderation in the SIP stoppage ratio offered support, sentiment was tempered by the depreciating rupee and firming domestic bond yields.

Broader market weak

Despite the headline indices ending higher, broader market participation remained weak. Both the Nifty Midcap 100 and Nifty Smallcap 100 closed in negative territory, while the market breadth remained skewed towards decliners.

Within the Nifty 500 universe, 308 stocks ended lower, highlighting the broad-based weakness beneath the benchmark recovery.

Most sectoral indices ended in the red, although media, banking and consumer durables remained relatively resilient. Metals and pharma were the top sectoral losers, while the Nifty IT index fell for the seventh consecutive session.

Among the Nifty 50 stocks, HDFC Life, Power Grid, ONGC, Bharti Airtel and Tech Mahindra emerged the top gainers. HCL Tech, Hindalco, Tata Steel, Adani Enterprises and M&M were the major laggards.

A total of 3,666 stocks traded on the NSE, of which 1,466 advanced, 2,079 declined and 121 remained unchanged. As many as 125 stocks hit their 52-week highs, while 124 touched their 52-week lows. Further, 127 stocks hit the upper circuit, and 98 hit the lower circuit.

Sunny Agrawal, Head of Fundamental Research at SBI Securities, said the market witnessed a range-bound session, with the Nifty ending 0.2 per cent lower before the CAS, and closing below the 23,400 level.

Agrawal said Brent crude continued to inch higher, surpassing the $102-per-barrel mark, while the rupee weakened for the third consecutive session against the US dollar, closing at the day’s low of 95.46. He also pointed to the European Central Bank’s interest rate decision and the release of US August PPI data as key events for investors.

Abhinav Tiwari, Research Analyst at Bonanza, said the late recovery appeared to be driven more by relief buying than a clear change in the market trend.

“A sustained decline in crude prices, improvement in the rupee and stronger FII flows will be important for a durable market recovery,” Tiwari said.

Asian markets remained under pressure during the session.

On Wednesday, BSE Sensex tumbled 813.35 points or 1.08 per cent to 74,764.23. Nifty 50 depreciated 203.60 points or 0.86 per cent to 23,431.50. Wall Street also remained weak, with the Dow Jones losing another 400 points on Wednesday, after a 600-point decline on Tuesday. The Nasdaq ended 0.6 per cent lower, while the S&P 500 lost 0.5 per cent.

The ECB is scheduled to announce its interest rate decision on Thursday evening, with a 25-basis-point rate hike expected. US inflation data over the next two days will also be closely tracked.