Sensex, Nifty slip after two-day rally as investors eye US CPI; Nifty FMCG defies market slump

After two days of gains, the Sensex and Nifty 50 slipped 0.5 percent in a volatile session on September 11, as investors braced for the release of the US CPI data later today. Except for Nifty FMCG, all other sectoral indices closed in the red, with auto and energy stocks dragging the market lower.

Vinod Nair, Head of Research at Geojit Financial Services, remarked that concerns over US political risks and fears of a recession could trigger short-term caution in global markets.

 

At close, the Sensex was down 357 points or 0.4 percent at 81,563 and the Nifty was down 122 points or 0.5 percent at 24,918. About 1,551 shares advanced, 2,242 shares declined, and 98 shares were unchanged.

The broader market mirrored the decline in benchmarks, with both the BSE Midcap and Smallcap indices falling by 0.5 percent.

 

Nifty Bank fell by half a percent on the day of the weekly expiry of BANKNIFTY futures contract.

 

The auto index fell 1.2 percent dragged down by Tata Motors and Mahindra & Mahindra. Tata Motors fell almost 6 percent to become the worst-hit stock in Nifty 50 after UBS Securities reiterated its 'Sell' rating, citing margin risks at Jaguar Land Rover and in its domestic passenger vehicle segment. UBS also maintained its price target of Rs 825, implying a 20 percent downside.

NTPC, SBI, Wipro, and ONGC were among the other biggest losers on the Nifty 50, each falling 1-4 percent.

 

Meanwhile, Shriram Finance, Britannia, Bajaj Finance, Asian Paints, and Bajaj Auto rose 0.5-4 percent, emerging as the top gainers on Nifty 50. Bajaj Auto shares surged for the third consecutive session, hitting a record high of Rs 11,498, with 1 million shares traded on NSE and BSE, far surpassing the weekly average of 0.3 million.

 

The dip in crude oil prices kept crude-sensitive sectors like paint, tyre, OMCs, and oil drillers in the spotlight. Nifty Energy fell nearly 2 percent.

The drop in crude oil prices, hitting a nearly three-year low, boosted paint and tyre stocks as lower raw material costs indicate higher profit margins. Shares of paint companies, including Asian Paints, Berger Paints, and Kansai Nerolac, surged over 2 percent.

Tyre companies like Somi Conveyor, Ceat, GRP, and Apollo Tyres saw gains ranging from 0.5 to 1 percent. On the other hand, oil drilling stocks like ONGC, Oil India, and Hindustan Oil Exploration fell 2-5 percent as lower crude prices meant squeezed profit margins for these companies.

Nifty FMCG bucked the trend in sectoral indices, climbing 0.3 percent with Varun Beverages, HUL, and Britannia leading the charge. The boost came after Finance Minister Nirmala Sitharaman slashed the tax on namkeen and savoury treats from 18 to 12 percent at the 54th GST Council Meeting on September 9.

 

Looking ahead, a strong monsoon and the expected boost in demand during the festive season may lift investor sentiment on the domestic front. However, for now, market participants remain focused on the upcoming Federal Open Market Committee (FOMC) meeting scheduled for September 17-18.

"The sharp dip in Brent crude to below $70 signals weakening demand globally, which in turn, indicates weakening growth prospects for the global economy. Therefore, rate cuts by the leading central banks of the world is now a foregone conclusion. The Fed will kick off its rate-cutting cycle this month," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

 

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