Sensex, Nifty end lower for second straight session; pharma stocks lead losses

Benchmark indices ended lower for the second straight session amid record surge in coronavirus cases and mixed global cues. Gains in consumer durables and capital goods stocks were offset by a fall in pharma and financial stocks. Sensex ended 59 points lower at 38,310 and Nifty lost 7 points to 11,300.

Investors turned cautious ahead of the release of CPI data. Yesterday, Sensex ended 37 points lower at 38,369 and NSE Nifty 50 closed 14 points lower at 11,308.

Kotak Bank, Cipla, Sun Pharma, Britannia and Dr Reddy's were among the laggards today on NSE, while HCL Tech, Tech Mahindra, SBI, Eicher Motors and Tata Motors were among the top gainers.

While IT stocks were trading among the top gainers, pharma scrips led the selling pressure in today's session. Gains in IT, auto, realty, media and metals were capped by losses in pharma, banking and financials.

Traders said gains were erased over worries of rising coronavirus cases. In India, coronavirus cases surpassed 23.95 lakh mark today, with total deaths standing at 0.47 lakh.

Global Markets

Earlier, domestic indices opened on a bullish note, although later erased gains with European markets opening in the red. European indices started lower today as investors were concerned over the fading possibility of economic recovery from the pandemic.

Asian markets were trading positive tracking overnight gains in the US supported by technology stocks. Wall Street closed higher amid signs of slowing down in coronavirus spread and better economic data. Traders shrugged off uncertainty over a second coronavirus stimulus bill after the Treasury Secretary Steven Mnuchin said the White House is open to resuming coronavirus aid talks with Democrats.

As per analysts, equities worldwide have turned muted as investors remained wary over the uncertainty regarding the fresh US economic relief and worsening coronavirus crisis on a global scale. Globally, there are 208 lakh confirmed cases and 7.47 lakh deaths from COVID-19 outbreak.

Vinod Nair, Head of Research at Geojit Financial Services said,"Global cues were also mixed as Asian markets ended positively while European markets were trading in the negative. Uncertainty in global markets has emerged due to the doubtful US stimulus package and the impact of the US-China trade meeting over the weekend.  Domestic stock valuation concerns and continuing high rate of virus infections impacted the Indian markets."

Valuation and outlook

As per Angel Broking, Nifty doesn't have enough strength to go beyond the sturdy wall of 11350-11400 as well. The index needs to break below 11238, which will result in some immediate correction towards 11125-11064.

Now, investors are keeping an eye over the US-China key trade talks scheduled on August 15, 2020. Breakthrough in the stalled US stimulus talks will decide the direction for equity markets.

Commenting on Nifty's near term technical outlook, Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments said," The Nifty has resumed its up move after a brief pause yesterday. We should be heading to levels closer to 11500 during the course of this month's expiry. The support for the Nifty is at 11150 so a closing below that level could be kept as a stop for all long trades."

Meanwhile, April-June quarterly earnings announcements by Hero MotoCorp, Tata Steel, Eicher Motors, Grasim Industries, Godrej Industries, Prestige Estates will also set the tone for the stock market tomorrow.

Commenting over the near term outlook for equity markets, Ajit Mishra, VP - Research, Religare Broking said,"Markets have been hovering in a narrow range for the last four sessions and indications are in the favour of further surge. However, a lot would depend upon the outcome of the Supreme Court hearing on AGR case on Friday. We thus advise continuing with hedged trades, with the bias on the positive side."

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