Metal Stocks Sink, IT Melts but Pharma Manages to Shine Amid Broad-based Selloff

Mumbai, June 23: A broad-based selloff gripped Dalal Street on Tuesday, with metal and information technology stocks emerging as the biggest drags on the benchmarks, while pharmaceutical shares bucked the trend. Fourteen of the 16 major sectoral indices ended in the red as investors booked profits after a recent rally across several sessions and reacted to weaker-than-expected business activity data for June.  

Metal Stocks Lead the Fall 

The Nifty Metal index was the worst-performing sector of the day, pressured by declines across major constituents including Vedanta Limited, Tata Steel, JSW Steel, Hindalco Industries and NMDC. The weakness mirrored a fall in global metal prices and concerns over demand prospects amid expectations of a rate hike in the US later this year. Vedanta led losses on the Nifty Metal index after a Rs 2,149 crore block deal sparked a sharp selloff in the stock. The transaction involved about 7.3 crore shares changing hands at around Rs 292 each, with market participants attributing the deal to promoter entity Twin Star Holdings trimming its stake.  

IT Stocks Melt 

Nifty IT index crashed more than 2% as Fed and Accenture loomed over stocks. Source: NSE 

Information technology shares remained under heavy selling pressure, with heavyweights such as Tata Consultancy Services, Infosys, HCLTech, Wipro and Tech Mahindra weighing on the Nifty IT index.  

The sector has been struggling since consulting giant Accenture issued a cautious outlook, reviving concerns about technology spending by global clients. Expectations that the U.S. Federal Reserve could raise rates later this year also hurt sentiment toward export-oriented technology companies.  

PSU Banks and Consumer Stocks Also Under Pressure 

Nifty Financial Services index fell nearly 1% with SBI declining amid report of state lenders suffering market loss in gold loan segment. Source: NSE 

The PSU Bank index fell on Tuesday, tracking weakness across public sector lenders after fresh data by Experian highlighted a loss of market share in the high-growth gold loan segment to private banks and non-banking financial companies (NBFCs). Sentiment in the pack remained subdued as investors weighed intensifying competition in a key retail lending category. State Bank of India fell 1.6%. 

Consumer durables also fell with Dixon Technologies (India) declining over 3%. 

Broader market sentiment remained weak, with mid-cap and small-cap indices falling alongside the benchmarks.  

Pharma Emerges as a Bright Spot 

In contrast, pharmaceutical stocks attracted buying interest. The Nifty Pharma index gained 0.9%, led by names such as Sun Pharmaceutical Industries, Dr. Reddy’s Laboratories, Cipla and Lupin. 

The sector benefited from reports that the U.S. drug regulator had approached Indian drugmakers regarding supplies of a critical cancer-treatment medicine. Investors viewed the development as a potential growth opportunity for domestic pharmaceutical exporters. Piramal Pharma rose over 6% leading the gains on the pharma index as the firm said it had received over 70 approvals from regulatory agencies across the globe over the past fiscal year. 

Weak PMI Data Adds to Caution 

Adding to the pressure, data showed India’s private-sector growth slowed to a three-month low in June. Services activity expanded at its weakest pace in 17 months, while manufacturing growth also moderated, prompting investors to lock in gains after the recent rally fuelled by lower crude oil prices and easing Middle East tensions.  

Despite softer oil prices remaining supportive for the economy, Tuesday’s sectoral performance indicated that investors preferred to reduce risk exposure amid concerns over growth, interest rates and global market volatility. 

Source

• NSE