Market's seven-day winning streak ends as FMCG stocks drag indices lower

Sensex sheds 0.08%, Nifty takes a deeper cut of 0.3% at close; mid-caps see 2% cut

The benchmark Sensex and the Nifty ended with losses for the first time in eight trading sessions amid losses in consumer stocks. After climbing to an intra-day high of 62,245, the Sensex settled at 61,716, down 49 points, or 0.08 per cent. The 50-share Nifty saw a deeper cut ending at 18,419, 58 points, or 0.3 per cent lower. In the previous session, both the indices had ended at record highs, having gained close to 5 per cent in just seven trading sessions.

Earnings disappointment by FMCG major Hindustan Unilever (HUL) weighed on the market. While the company met profit estimates, the pressure on margins due to rising raw material prices disappointed the Street. HUL shares fell 4.1 per cent to end at Rs 2,546. Industry peer ITC lost 6.2 per cent to Rs 246. Both fell the most among Sensex stocks and dragged the index lower by 215 points. Gains in technology and banking stocks helped offset the losses. Tech Mahindra gained the most at 4 per cent, while Infosys rose 1.6 per cent. HDFC Bank and Kotak Mahindra Bank rose over a per cent each.

Overall, market breadth was weak on Tuesday with only 979 advancing stocks and 2,382 declining stocks on the BSE.

The broader market saw a sharp correction. The Nifty Midcap 100 shed 2.2 per cent, while the Nifty Smallcap 100 fell 1.7 per cent.

Other major declining stocks included Tata Motors (down 4.9 per cent), Eicher Motors (4.5 per cent).

With the exception of tech and energy, all BSE sectoral indices ended with losses. BSE Realty and BSE FMCG fell the most at 4.6 per cent and 3.1 per cent, respectively.

Experts said the risk-reward in the market has turned unfavourable following the sharp up move since August. Rising bond yields and commodity prices are expected to put pressure on the markets, they said. Any disappointment in corporate earnings could spook the markets as premiums remain at elevated levels, added experts.

Among the Nifty components that have declared results so far, IT companies have managed to beat analyst estimates while FMCG has disappointed.

“Accelerated demand and good quarterly corporate results have kept the investor’s interest sanguine. However, rising global commodity and energy prices continue to be a cause of worry. In this environment of high bullishness, one need to stay grounded of various risks including valuations. We would suggest investors remain sector or stock specific. With a lot of heavyweights reporting their numbers this week, it would keep the markets volatile,” said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.

After soaring 9 per cent a day earlier, India Vix index rose another 1 per cent to 17.4.

“The IT sector continued to hold the fort, while the rest of the recent performers like reality and auto went into a sell-off mode. The market is expected to get more stocks and sector specific as parameters are extremely stretched,” said Vinod Nair, Head of Research, Geojit Financial Services.