Markets take a breather as investors book profit

After touching all-time highs for the previous seven consecutive sessions, the markets took a pause on Thursday as investors decided to book profits. The Nifty declined 50.8 points (0.38%) to close at 13,478.3 while the Sensex declined by 143.62 points (0.31%) to close at 45,959.88.

Indian shares took cues from the Asian markets which were under pressure on Thursday. The bourses in Japan, Taiwan and South Korea were down between 0.23% and 0.33%. European markets were rallying ahead of monetary policy announcement by the ECB, with stock markets in France, Germany, and the UK gaining between 0.1% and 0.5% in early trade.

However, FMCG stocks rallied and were the top gainers on the Nifty. This is because the sector has been witnessing renewed buying interest from investors. The Nifty FMCG index, the sole gainer among the sectoral indices, hit a 52-week high of 34,122.5 and closed at 34,054.8. Buying in FMCG stocks also helped markets recover from its low levels.

Indian equities have been witnessing sectoral rotation in the last eight to nine months. Various sectors have outperformed and underperformed depending on the market’s view about the impact of Covid-19 on the economy.

According to brokerages such as Kotak Institutional Equities, the sectoral rotation is simply a re-rating story for different sectors. In its report, Kotak said, “The sequential ‘rotation’ is nothing but sequential re-rating of different sectors over the past nine months, linked to the market’s growing conviction about economic and earnings recovery and the negative impact of Covid-19 pandemic being far less severe than the market’s initial expectations in March 2020.”

Foreign portfolio investors on Thursday bought stocks worth $301.3 million, provisional data show. Domestic institutional investors sold stocks worth $303.36 million. The futures and options segment on NSE saw a turnover worth Rs 58.52 lakh crore and the cash segment saw a turnover worth Rs 61,138.42 crore. This is against the six-month average of Rs 59316 crore in the cash market and Rs 21.7 lakh crore in the futures and options segment.

Big gainers on the Nifty were Nestle India, ITC, Britannia Industries, Hindustan Unilever and Adani Ports and SEZ, up by 4.16%, 3.7%, 3.14%, 2.39% and 1.7%. Significant losers were UPL, Ultratech Cement, Shree Cement, Tata Motors and M&M, down by 11.29%, 3.32%, 2.79%, 2.6% and 2.4%.