Indian equity indices opened in the red on Friday, tracking weakness from global peers on rising worries over future rate trajectory in the US, while investors brace for the results of stress test of small- and mid-cap mutual funds amid concerns of froth in these segments.
The BSE Sensex was trading 416 points lower at 72,681. Nifty50 was trading at 22,010, down 136 points at around 9.55 am.
The broader, more domestically-focused small- and mid-caps gained 0.8% and 0.45% in the early trade.
Investors will focus on the results of stress tests of small- and mid-cap mutual funds, which have started trickling in. The stress tests will help gauge the funds’ resilience to sudden redemption pressures.
From the Sensex pack, Infosys, M&M, Axis Bank, HCL Tech, and Tech Mahindra opened with cuts, while Bharti Airtel, Power Grid, SBI, Tata Motors, and JSW Steel opened with gains.
Among individual stocks, Paytm opened with a 5% upper circuit after the digital payments company was granted a third-party application provider license by the country’s payments authority, which will enable it to facilitate payments after its banking unit ceases operations.
RailTel Corporation of India shares also rose 9% after the company received a work order worth Rs 130 crore related to a network connectivity project in Odisha.
On the sectoral front, Nifty IT, Bank, Auto, Metal, Pharma, and Oil & Gas declined, while Nifty Realty and Media surged.
Experts View
“Results of the stress tests conducted by the mid and small-cap schemes of mutual funds expected today will be keenly watched by the market. If there are clear signs of stress there can be regulatory action by the SEBI, which will impact sentiments in the broader market. Even without stress tests one thing is clear: the broader market valuations are expensive and in some pockets valuations are frothy. This is clearly unsustainable,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.”Investors should understand that high-quality large-caps with good growth prospects are available at fair valuations. Focussing on such stocks would be safer than chasing small-caps with stretched valuations, Vijayakumar suggested.
Global Markets
Asian markets declined, with the MSCI Asia ex-Japan losing 1.1%. Wall Street equities closed lower overnight after data showed hotter-than-expected U.S. producer price index inflation in February.
The data, which followed sticky consumer inflation earlier in the week, added to worries of delay in the onset of interest rate cuts from the Federal Reserve this year.
FII/DII Tracker
Foreign portfolio investors sold Indian shares worth Rs 1,356 billion rupees on a net basis on Thursday. Domestic institutional investors bought a net of Rs 139 crore of stocks.
Crude Oil
Oil prices edged lower on Friday but were on track to gain nearly 4% for the week as sharp declines in U.S. crude and fuel inventories, drone strikes on Russian refineries and a rise in energy demand forecasts buoyed prices.
Brent crude oil futures for May fell 15 cents, or 0.2%, to $85.27 a barrel, after crossing $85 a barrel for the first time since November on Thursday. U.S. West Texas Intermediate (WTI) crude for April fell 14 cents, or 0.2%, to $81.12.
Currency Watch
The Indian rupee rose 11 paise to 82.92 against the US dollar in early trade. The dollar index, which tracks the movement of the greenback against a basket of six major world currencies, increased 0.08% to 103.43 level.
(With inputs from agencies)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
