Sensex Edges Lower; ITC, Metal Stocks Weigh

BSE Sensex and Nifty edged lower on Monday after trading mostly in a narrow band. The Sensex ended 49 points lower at 25,819, weighed down by losses in metal stocks and heavyweights like ITC. The Nifty settled at 7,849, down 7 points.

Among the metal stocks, Tata Steel, Vedanta and Hindalco were down 2.4-3.8 per cent. Vedanta and Hindalco will be shifted out of the BSE benchmark Sensex index from December 21. Passive funds that track the Sensex would have to drop these stocks from their portfolio, leading to selling pressure in the stocks. Further hurting the sentiment in metal stocks, prices of zinc, copper, lead and nickel were all near their lowest in five to seven years in global markets.

Asian Paints and Adani Ports and Special Economic Zone will replace Vedanta and Hindalco in the Sensex. These two stocks ended over 2.5 per cent higher.

Buying in select auto stocks also supported the markets with Hero MotoCorp, Bajaj Auto and M&M among the gainers. The sentiment has perked up in auto stocks following the pay panel's better-than-expected recommended hike.

FMCG heavyweight ITC fell over 2 per cent while nearly 2 per cent while Bank of Baroda, HDFC Bank and PNB led the decline in banking stocks.

The broader markets outperformed the frontline stocks. The BSE mid-cap and smallcap indices ended higher.

Markets are likely to be volatile this week due to the derivative expiry on Thursday. Analysts say that markets in the near term would be watching the progress of the winter session of the Parliament that begins from November 26. They say that if Nifty slips below 7,800, the selling pressure could accelerate.