Bears prowled Dalal Street on Friday amid mixed globals cues with Sensex and Nifty tumbling nearly a percent in opening trade.
At 09:15 am, the Sensex was down 669.25 points or 0.82 percent at 81,198.30, and the Nifty was down 204.10 points or 0.82 percent at 24,806.80. About 624 shares advanced, 1771 declined, and 142 were. unchanged.
The broader market, mainly the BSE mid and smallcap index underperformed benchmarks, falling over 1 percent each. Sectorally, Nifty metal led the losses, falling over 2 percent. Nifty Auto, Infra, PSU Bank, and Realty indices were also trading upto a percent lower.
"The underperformance of banking majors is limiting market momentum. We continue to advocate a "buy on dips" strategy, emphasizing careful stock selection," said Ajit Mishra – SVP, Research, Religare Broking Ltd.
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A barometer of market anxiety, the India VIX, surged 2.78 percent and opened at around 13.29, signalling a rise in volatility. This uptick in volatility underscores the market's uncertain sentiment.
Fundamental View
The sudden turn for the worse for the US economy reflected in the ISM Manufacturing index dipping sharply to 46.6 spooked the US and other developed country markets yesterday.
This has brought back recession fears in the US. The market which has been soaring on the soft landing expectation turned nervous on the possibility of a US recession and its impact on the market.
"The sharp dip in the US 10-year bond yield to 3.95% indicates the market’s fear. This can have an impact on the Indian market, too, " said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
The rally in India has been sustained more by money flows into the market than by fundamentals. "Without fundamental support the rally cannot sustain. It remains to be seen whether the buy on dips strategy will work this time too. Since valuations are high some profit booking, particularly in mid and small caps, can be considered, he added.
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Technical View
The current market action signals a continuation of range-bound action in the market, according to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.
"The crucial hurdle of 25000-25100 levels remains intact and the Nifty could not break above this area decisively. Chances of further consolidation or minor dip are not ruled out in the short term. Immediate support is at 24750 levels," he said.
In Bank Nifty, consolidation has taken the form of a symmetrical triangle pattern.
"A range breakout shall decide the further trend hereon. Thus, we shall maintain our rangebound outlook for the Bank Nifty. The range of consolidation for the Bank Nifty is likely to be 51300 – 52000," said Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas.
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