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Informist, Friday, Jul 19, 2024

By Apoorva Choubey 

MUMBAI – India's headline indices ended a four-day gaining streak today as risk aversion swept across global financial markets, amidst reports of widespread disruptions to international airlines, global banks, and other essential services due to an outage at Microsoft. The Nifty 50 and Sensex had touched fresh lifetime highs at open, led by early gains in information technology stocks, but as the day progressed, traders and investors started booking profits, especially in domestic cyclical and metal sectors. 

Global risk appetite has diminished this week due to a confluence of factors, including concerns over trade tensions between China and the US, a lack of details provided by the Chinese government on the implementation of steps for achieving economic policy goals, and a bleak growth outlook for major economies in Europe, said market watchers. The news of technical disruptions today due to issues at Microsoft Azure's cloud services served as a trigger for investors to take some money off the table, they said.

Major US airlines grounded flights today citing communications issues, while other carriers, media companies, banks and telecom firms around the world also reported disruption in their operations due to system outages, reports said. In India, technical disruptions in the stock market were limited to a few brokerage houses such as Nuvama Wealth Management and 5paisa Capital, while most others were reported to have been functioning fine. 

Most Asian equities had opened lower today, following a sell-off in US equities on Thursday. Reports have suggested that the US was considering tighter curbs on exports of advanced chip technology to China. Earlier this week, investors were also hit with disappointing economic growth data from China. 

The Nifty 50 closed at 24530.90 points, down 269.95 points or 1.1% from the previous close, after hitting a lifetime high of 24854.80 points. The Sensex closed 0.9% or 738.81 points lower at 80604.65 points.  

IT stocks, which held ground in early trades, gave up their gains, while other sectoral and broader indices incurred substantial losses after sentiment turned extremely bearish on weak global cues and reports of online businesses in several countries, including in India, hit by cyber outages, Prashanth Tapse, senior vice president – research, Mehta Equities, said in a note.

Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services agreed with the view that equities were hit due to new tensions between the US and China, as well as the Microsoft outage. Investors are also cautious ahead of the Union Budget, to be announced on Tuesday, which will provide the next set of directions to the market, he said in a note. 

The sell-off was deeper in the broader markets, which saw losses for the second consecutive day. The Nifty Midcap 150 and the Nifty Small-Cap 250 fell 2.1% and 2.4%, respectively. 

Among sectors, metals were the worst hit as concerns over the Chinese economy and fears over US-China trade tensions have made investors nervous about visibility for international prices and demand. The Nifty Metal index fell 4% and was the biggest laggard among sectoral indices, all which closed in the red today. Tata Steel's shares fell over 5%, while JSW Steel's shares lost 4.5%. 

Several public-sector companies' stocks, especially those being termed as "Modi stocks", which are seen benefitting from the government's policies and capital expenditure plans, also saw intense profit booking, as they have shot up quite a lot in the last few months. The Nifty PSE index fell 4%, while the likes of Bharat Dynamics, Hindustan Aeronautics and Bharat Electronics declined 2-5%.  

Major laggards also included real-estate, oil refining, automobile and infrastructure companies, many of which have risen over the past few weeks. Persistent Systems fell 6% after reporting disappointing Apr-Jun earnings. 

State-owned Bharat Petroleum Corp fell 4.5% after the company's net profit tumbled 71.4% from a year ago to 30.15 bln rupees for Apr-Jun, in line with estimates by analysts. The decline was due to a fall in refining margins. 

UltraTech Cement closed 3% lower. The company reported a consolidated net profit of 16.97 bln rupees against the Street's estimates of 17.83 bln rupees. Wipro announced its earnings after market hours, reporting a higher-than-expected consolidated net profit for the quarter. 

JSW Steel also reported earnings after market close. Its consolidated net profit of 8.45 bln rupees was lower than the expected 11.35 bln rupees. Reliance Industries closed 2% lower ahead of the company's results  later today. 

Shares of Infosys rose as much as 5% to hit a two-year high of 1,844 rupees after the company raised its growth guidance for the current financial year. However, the stock gave up some gains to close 2% higher, as investors booked profits amidst the weakness in the market. 

Rail Vikas Nigam Ltd ended 5% higher and was the top gainer on the Nifty 200 index. The company has entered into a memorandum of understanding with Israel-based United Construction Ltd to collaborate on various projects across railways, transit systems, and other sectors in Israel. 

InterGlobe Aviation's shares fell 3% as technical issues led to the company's low-cost airline IndiGo cancelling hundreds of flights. Other airlines also delayed and cancelled flights as airport travel systems were down due to the Microsoft outage.

* Of the Nifty 50 stocks, 5 rose, one was unchanged and 44 fell

* Of the Sensex stocks, 4 rose and 26 fell

* On the NSE, 531 stocks rose, 2,185 fell, and 72 were unchanged

* On the BSE, 858 stocks rose, 3,071 fell, and 81 were unchanged

* Nifty Metal: down 3.9%; Nifty Energy: Down 2.7%; Nifty IT: Down 0.2%

BSE                                               NSE
Sensex: 80604.65, down 738.81 pts or 0.9%         Nifty 50: 24530.90, down 269.95 pts or 1.1%        

End

Edited by Tanima Banerjee

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