The domestic benchmarks ended lower for the second straight session on Friday, led by rate-sensitive realty, auto, and PSU bank stocks. The caution prevailed in the market ahead of the Reserve Bank of India’s policy meeting due next week. Analysts at Barclays expect the monetary policy committee (MPC) to hike the reverse repo rate by up to 0.25% to counter rising inflation. The hawkish policy stance by the Bank of England and the European Central Bank as well as the record rise in crude price also dented market sentiment.

The BSE Sensex ended 143 points, or 0.24%, lower at 58,644, and the NSE Nifty fell 44 points, 0.25%, to 17,516.

In a similar fashion, the broader markets also ended lower. The S&P BSE Midcap index dropped 0.68%, and the S&P BSE Smallcap index slipped 0.45%.

"The domestic market continued to ride yesterday’s downtrend with most sectors barring FMCG and metal facing sell-off. Western markets also lacked strength as the Bank of England imposed a back-to-back rate hike in yesterday’s policy meeting while the dovish ECB acknowledged the risk of rising inflation signalling a rate hike in the future. Wall Street remained highly volatile as a huge sell-off was seen in Meta (Facebook) post its earnings," says Vinod Nair, Head of Research at Geojit Financial Services.

The overall market breadth on the BSE was negative, with 1,719 shares declining out of total 3,701 traded stocks. As many as 1,855 shares advanced and 127 were unchanged.

Realty, auto, PSU bank sectors lead fall

On the sectoral front, rate-sensitive realty, auto, and PSU banks were among the worst performers, while metal and power gained the most.

The BSE realty index emerged as the biggest loser by falling 2.83%, led by Godrej Industries, Prestige Estates Projects, Brigade Enterprises, and Macrotech Developers.

The realty index was followed by auto space, which ended 1% lower. The top losers in the auto sector were Hero MotoCorp, Balkrishna Industries, Mahindra & Mahindra, Bajaj Auto and Eicher Motors.

Top gainers and losers

Out of the top 30 shares on the BSE Sensex pack, 11 heavyweights closed higher, while the remaining ended in negative terrain.

State Bank of India, the country’s largest lender, topped the losers’ chart by falling 1.8% as investors turn cautious ahead of December quarter earnings. The other top laggards include Mahindra & Mahindra, NTPC, Kotak Mahindra Bank, and Wipro, which dropped more than 1% each.

On the gaining side, pharma major Sun Pharmaceutical Industries lead the chart by rising 1.2%. Among others, Asian Paints, Tata Steel, UltraTech Cement, and Larsen & Toubro gained up to 1%.

Shares in news

State Bank of India (SBI): The PSU lender ended 2% lower ahead of its third quarter earnings report slated to be released tomorrow. During the session, shares of the country’s largest lender gained as much as 1.2% to hit a 52-week high of ₹546.4 apiece.

Godrej Properties: The real estate company, a subsidiary of Godrej Industries, dropped 9.4% after its board approved an investment of ₹400 crore in DB Realty (DBR) to acquire around 10% stake through the issue of warrants.

ITC: Shares of FMCG company ended 0.35% lower despite reporting better-than-expected earnings for the December quarter of 2021. The stock had gained nearly 2% in intraday trade today.

Lupin: Shares of pharma major closed 2.7% lower after it reported disappointing earnings for the third quarter ended December 31, 2021. The earnings were impacted by one-time expenses related to residual metformin returns and provision for aged stock returns of Oseltamivir.

Ambika Cotton Mills: Shares of the textile company surged 20%, extending rally for the second day, after ace investor Vijay Kedia on Thursday acquired 40,007 shares in the company at ₹2,243.12 per share, according to bulk deal data published by NSE. The transaction is valued at around ₹9 crore.

Bank of India: Shares of PSU lender dropped 3.5% even after it reported 90% year-on-year growth in net profit at ₹1,027 crore for the third quarter ended December 2021. However, the total income declined to ₹11,211 crore as against ₹12,311 crore in the same period a year ago.

Asian market rebounds

In the Asia-Pacific region, Japan’s Nikkei 225 rose 0.73%, Indonesia’s Jakarta Composite also added 0.71%. Australia’s ASX 200 index also settled 0.6% higher. In a similar trend, the Straits Times in Singapore gained 0.47%, and South Korea’s KOSPI rallied 1.5%.

Hong Kong’s Hang Seng index was the biggest gainer in the regional market by surging 3.2%. Markets in Hong Kong resumed trade on Friday after being closed for most of this week for the Lunar New Year holidays. Markets in mainland China, Taiwan, were closed for the holiday.

European stocks mixed on rising bond yields, rate hike

Shares in Europe traded mixed on Friday as rising bond yields and hawkish policy stance by the Bank of England and the European Central Bank weighed on market sentiment. The negative finish at Wall Street in overnight trade also injected negativity in the market.

In European markets, Germany’s DAX dropped 0.8% in early deals, while France’s CAC index slipped 0.24%. The U.K.’s FTSE 100 index rose 0.4%, while Spain’s IBEX index dropped 0.5% in opening trade.

In the overnight trade, all three U.S. benchmarks closed lower, snapping a four-session gaining streak, as a sharp fall in Meta, formerly known as Facebook, dragged technology stocks lower. The benchmark S&P 500 tumbled 2.44%, the blue-chip Dow Jones index fell 1.45%, and the tech-heavy Nasdaq Composite ended 3.74% lower.

Technical outlook

According to Rupak De, Senior Technical Analyst at LKP Securities, Nifty remained volatile throughout the day with a bearish tone. “The consolidation may continue in the short term as long as Nifty remains within the bands of 17,400 and 17,800. Any directional breakout in the near term may induce further significant move in the market," De said.

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