Market weekly: Nifty recedes from record high as Fed minutes, geopolitical tensions weigh

The Nifty started off the week with decent gains, buoyed by gains in metals and FMCG stocks, amid strong global cues. Both the indices closed at record highs on Monday. Nifty extended its rally on Tuesday, led by gains in IT and FMCG shares. Strong quarterly performance reported by IT companies and healthy guidance and upgrades by analysts aided the rally in these shares.

The index retreated from record-high levels on Wednesday, ending a 7-day winning streak as weak global cues weighed. Global investors awaited the release of FOMC minutes to get hints around the central bank’s policy on inflation. 

The stock market was closed on Thursday, on account of Muharram. The index tanked on Friday, tracking global peers as the fear of earlier-than-expected Fed tapering set off a selling spree across markets. For the week, the Nifty closed 0.48% lower. Metals stocks were the worst hit. 

Top gainers and losers

• 33 Nifty stocks have registered negative returns in the week. Hindalco, JSW Steel, Tata Motors, Tata Steel and UPL among biggest losers
• HUL, Britannia Industries, Bajaj Finance, Nestle, Bajaj Finserv & Tata Consumer among top Nifty gainers
• Except for FMCG & IT, all sectoral Indices post negative returns in the week
• Nifty Realty, PSU Bank & Metal indices decline 6-9% in the week

Here is a quick recap of the market moving developments:

• Geopolitical concerns: Global investors took stock of potential geopolitical implications following the rise of the Taliban in Afghanistan. Investors were also concerned with the sudden rise of the delta variant across the globe. Many large cities in Australia have gone into a lockdown. Meanwhile, New Zealand has also announced a complete lockdown, after registering its first Covid case in 6 months. Economic data in China has come in below forecasts, raising concerns around the pace of economic recovery.
• Hawkish Fed comments: Federal Reserve minutes hinted that the central bank could start slowing the pace of bond purchases later this year, putting an end to its pandemic-driven easy monetary policy. The Fed said that substantial progress had been made toward their inflation goal, while gains had been made toward their employment objective. Asian shares fell while the dollar reached multi-month highs against peers, following the release of the minutes. According to analysts at BoFA, Fed taper talk and rise in U.S. yields and the dollar are among factors that could act as negative triggers in the Indian stock market, as FII’s may pull out of emerging markets to safer assets. 
• Metals stocks plunge: Metal stocks came out as the biggest losers in the week, as fears of slowing growth and a potential easing in the asset-buying program instigated a market-wide sell-off and investors moved to safer assets. Analysts pointed out that commodities had peaked. Further, the dollar's rise has also put pressure on commodities. 

IPO euphoria ends: IPO markets took a breather in the week, with stocks listing at a discount in the  week, reversing the trend of high gains. After listing at a 5% discount on Tuesday, Windlas Biotech is now down more than 20% from issue price. Krsnaa Diagnostics listed at a premium of just 4% over issue price. Exxaro Tiles made its debut at a 5% premium. Cartrade Tech shares closed Friday’s session at a 8% discount to IPO price. The only exception was Devyani International, which listed at a premium of 37% to its issue price. 

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