The market witnessed continued profit booking in the second consecutive (truncated) week ended January 25 amid high volatility led by persistent FII selling, monthly F&O expiry, mixed earnings, and ahead of the Interim Budget to be presented next week.
The equity indices started the truncated week on a high note on January 23 but bears took charge and dragged the Sensex by 1000 points on the same day, while witnessing some buying on January 24. However, selling on Thursday dragged the Nifty below 21,250, intraday.
The market was shut on January 22, the modified holiday for the Ayodhya Ram Mandir's “Pran Pratishtha” Ceremony, and on January 26 on account of Republic Day.
For the week, the BSE Sensex declined 1 percent or 722.98 points to end at 70,700.67, while Nifty50 finished at 21,352.6, falling 219.2 points or 1 percent.
Among broader indices, BSE Midcap, Smallcap and Largecap indices fell 1.6 percent, 0.5 percent, and 0.9 percent, respectively.
On the sectoral front, the Nifty Media index shed 10 percent, the Nifty Realty index was down 4.5 percent, Nifty Bank index fell 2.6 percent and the Nifty PSU Bank index was down 2 percent. On the other hand, the Nifty Pharma index gained 1.7 percent.
“The market is witnessing a lot of volatility ahead of the Budget with a negative bias as investors further booked profits to cut down their long positions on the expiry day. Continuous outflows of foreign funds from the domestic equity market has been denting the sentiment over the past one week as they have net sold local shares worth more than Rs 33,000 crore in January so far," said Prashanth Tapse, Senior VP (Research), Mehta Equities.
"A rise in US bond yields coupled with mixed Q3 earnings so far and an uptick in international crude oil prices due to simmering tensions in West Asia has been making investors jittery about the near term prospects."
"Prospects of imminent US rate cuts are diminishing. Bets on a rate cut at the Federal Reserve’s (Fed) March meeting have dwindled from 76% to 41% over the past month. On the technical front, with the immediate resistance being at the 21,400 mark, we expect the market to go down further towards 21,100 and 21,000 eventually, and if it breaks the 21,000 level we can witness more selling pressure up to 20900-20500 levels. Any trend change would happen only once the Nifty surpasses the 21,500 mark,” he added.
On the sectoral front, Nifty Media index shed 10 percent, the Nifty Realty Index was down 4.5 percent, Nifty Bank index fell 2.6 percent and the Nifty PSU Bank index was down 2 percent. On the other hand, Nifty Pharma index rose 1.7 percent.
During the week, Foreign institutional investors (FIIs) sold equities worth Rs 12,194.38 crore, while Domestic institutional investors (DIIs) provided some support as they bought equities worth Rs 9,701.96 crore. In January so far, the FIIs sold equities worth Rs 35,778.08 crore, and DIIs purchased equities worth Rs 19,976.66 crore.
The BSE Small-cap index shed 0.5 percent. Karnataka Bank, Zee Media Corporation, Tanla Platforms, Bliss GVS Pharma, MPS, MSTC, Angel One, Restaurant Brands Asia, Cyient lost between 10-12 percent, while IFCI, Transformers and Rectifiers India, Salasar Techno Engineering, IFB Industries, Visaka Industries, Borosil Renewables, HLV, ALLSEC Technologies, Steel Exchange India and Dhunseri Ventures added between 20-37 percent.
Where is Nifty50 headed?
Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas:
On Thursday, the Nifty opened on a flat note and witnessed volatile price action. It closed down ~90 points. On the daily charts, we can observe that the counter-trend rally faced resistance at the zone of 21,520–21,550. On the downside, the 21,240–21,220 zone acted as a support zone where the 40-day moving average is placed. Thus, the Nifty is consolidating within these two parameters. A breach of this range shall lead to a move in that direction. The hourly momentum indicator has a positive crossover which is a buy signal and hence there can be a minor degree bounce up to 21,520–21,550 before it resumes the next leg of the fall.
Bank Nifty has witnessed a sharp pullback from intraday lows though closed marginally in the red. On the hourly charts, we can observe that there is a positive divergence and a positive crossover which indicates a loss of momentum on the downside and indicates that there can be a relief rally going ahead till 45,500- 45,700. On the downside, 44,600–44,500 is the crucial support zone.
Prashanth Tapse, Senior VP (Research), Mehta Equities
The market is witnessing a lot of volatility ahead of the interim Budget with a negative bias as investors further booked profits to cut down their long positions on the expiry day. Continuous outflows of foreign funds from the domestic equity market have been denting the sentiment over the past week as they have net sold local shares worth more than Rs 33,000 crore in January so far. A rise in US bond yields coupled with mixed Q3 earnings so far and an uptick in international crude oil prices due to simmering tensions in West Asia has been making investors jittery about the near-term prospects.
On the technical front, with the immediate resistance being at the 21,400 mark, we expect the market to go down further towards 21,100 and 21,000 eventually, and if it breaks the 21,000 level we can witness more selling pressure up to 20900-20500 levels. Any trend change would happen only once the Nifty surpasses the 21,500 mark.
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