The Nifty Bank slipped 238 points to 57,172, while the Nifty Midcap index fell 333 points to 63,002. Market breadth also favoured declines, with the advance-decline ratio at 2:3.
Here are the key factors behind today’s market fall:
1. Global cues turn unfavourable
Global cues remained unfavourable, keeping pressure on domestic equities.
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2. Auto stocks face selling pressure
Auto stocks came under selling pressure after a mixed August update. The Nifty Auto index fell 2%, while auto ancillary stocks also slipped, tracking the move in original equipment manufacturers. Sona BLW and Uno Minda declined 3% each.
3. Higher crude prices weigh on key sectors
Higher crude prices weighed on airline, paint and oil marketing company (OMC) names. Asian Paints was the top loser.
4. IT stocks drag
Information technology stocks were among the key drags on the market.
5. Cable and wire stocks remain under pressure
Cable and wire stocks faced selling pressure amid competition concerns, with KEI Industries declining 3%.
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6. Power stocks gain, but fail to lift the broader market
Power stocks gained on increased demand. Tata Power and JSW Energy rose 4% each, but gains in select stocks were not enough to offset broader weakness.
Reliance Industries provided support to the market, while Adani Ports and Adani Enterprises recovered from intra-day weakness to close 1% higher each. Coal India was the top Nifty gainer, rising more than 4% after a healthy update for August.
Tata Motors Passenger Vehicles gained 1% after Jaguar Land Rover unveiled its first electric Range Rover. Vodafone Idea rose 3% after the company unveiled its new brand identity.
From the Sensex basket, Coal India Ltd, Adani Ports & Special Economic Zone Ltd, Power Grid Corporation of India Ltd, NTPC Ltd, Reliance Industries Ltd and ITC Ltd were the major gainers. Eicher Motors Ltd, Wipro Ltd, Bajaj Auto Ltd, SBI Life Insurance Company Ltd, Infosys Ltd and Asian Paints Ltd were the biggest laggards.
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Siddhartha Khemka, Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd, on Coal India, said, “I think after two years of underperformance, or you can say weak growth, finally August offtake as well as dispatch growth numbers improved meaningfully for Coal India. So, strong power demand with weak hydro generation, that is driving thermal power generation and leading to sustained coal demand and offtake.
Coal inventories, as you already highlighted, are at a three-year low, and August e-auction premiums have also gone up because of the strong demand. So, overall, we believe that the stock is definitely volatile and largely would be liked by some of the value investors, given the high dividend yield as well as the valuations at which it continues to trade. It’s not a stock for the growth seekers.
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And having said that, if you look at what the volume CAGR is, what we expect is about 3% to 4% volume CAGR, revenue and EBITDA of about 4% and 9% CAGR. So, with that kind of number and the dividend yield, that always helps in giving some downside support. I think for value investors who are looking for this stock, this is a good sign that the core business is showing signs of improvement. We remain positive. We have a buy rating and a target price of ₹510 on Coal India.”
