Closing Bell: Sensex, Nifty close flat amid high volatility; metal, auto outperform

Taking Stock | Sensex, Nifty end flat in choppy trade; metal, auto stocks shine

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After the bull run, banking stocks are taking a halt, in anticipation of the Supreme Court hearing on moratorium and ongoing MPC meeting while both the outcomes are unlikely to hurt the banking industry. The sector can reverse, as implication of moratorium is well factored and RBI is expected to maintain its accommodative stance with no change in rate given heightened inflation in consecutive months.

Positively, more liquidity measures can be released, given weak economic outlook and to support the banking sector. Globally, the market is maintaining its gains, due to talks of stimulus and vaccination in the US and Europe. While plans of vaccination and good GST collection is helping India to attain a faster economic recovery.

Nifty has formed one more bullish continuation formation on a daily chart. Despite weakness in the world markets and fall in US stock futures, the market has rejected to fall below the level of 13,000. However, the upside seems limited to 13,250/13,350 levels. Today, Nifty has also shifted its base to 12,980 from 12,790 levels. The strategy should be to trade long in the market with a stop loss at 12,980 on the downside.

The short term trend of Nifty continues to be positive with range bound action. The market is expected to face stiff resistance around 13150 or slight higher in the coming sessions. A sustainable move above this area could open some more upside for the market. A lack of strength to sustain around 13150 levels is expected to result in another one day sharp drop in the index from the highs. immediate support is now at 12980.

Markets ended almost unchanged in a highly volatile trading session. The benchmark gradually inched lower after the flat start however strong buying in the last hour helped the index to close flat at 13,114 levels. The broader markets outperformed wherein both Midcap and Smallcap ended higher by 0.5% and 0.7% respectively. On the sector front, except Banking and Finance, all the other indices ended with healthy gains wherein Realty, Metal and Oil & Gas were the top gainers.

We’re seeing consolidation in the index but the bias is still on the positive side. Going ahead, further updates on COVID vaccines and cues from the global markets will remain in focus. Besides, on the domestic front, RBI’s monetary policy meet would also be on investors' radar. The MPC is likely to maintain the status quo however their commentary on growth and inflation would be critical.

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The Nifty failed to get past the 13150. It took support at the 13000 level and jumped back to close above 13100. The index needs to cross 13150 in order to achieve the next target of 13200-13300. We must note that this zone can prove to be a stiff resistance where selling pressures can be witnessed. On the downside, 12950-13000 is a good support and if we break that, we could see a slide of 150-200 points.

Rupee scaled down by afternoon trade Wednesday as local stocks indexes tanked nearly 1% mainly financial stocks and RBI bought dollar both in spot and futures. Weak stocks and RBI intervention kept rupee bulls at bay, and a strong buying witnessed after few days of rupee strengthen. 73.50 remains key support zone for USDINR.

: Benchmark indices recovered from the day's low point and ended with little change in the volatile session on December 2 supported by the metal and auto names.

At close, the Sensex was down 37.40 points or 0.08% at 44,618.04, and the Nifty was up 4.80 points or 0.04% at 13,113.80. About 1573 shares have advanced, 1124 shares declined, and 134 shares are unchanged.

Kotak Mahindra Bank, HDFC Bank, HDFC, Shree Cements and Britannia Industries were among major losers on the Nifty, while gainers were GAIL, ONGC, Asian Paints, Titan Company and Adani Ports.

Among sectors, metal index added 2 percent and auto index gained 1 percent, while selling seen on the banking names.

Silver prices rallied sharply on Tuesday, following a dovish tone from Fed Chair, Powell, along with robust manufacturing PMI data across the globe. Fed Chair, Powell, has said that the Fed would continue to provide very strong support, and it is premature to be pulling back support for the economy.

Fresh discussion about US economic stimulus from the Congress is also supporting precious metals. A top Senate Republican, Mitch McConnell, has said on Tuesday that the US Congress should include a fresh wave of coronavirus stimulus in a $1.4 trillion spending bill.

Silver prices are likely to find support near the 200-days EMA at $22.60. Meanwhile, key resistance is seen near the $25.17 and $26.60 levels. Silver is likely to trade firm after bouncing from support levels.

Gold steadied on Wednesday as investors were cautious over the passage of a U.S. stimulus package, while markets cheered UK's approval of the Pfizer COVID-19 vaccine, limiting bullion's upside.

The 5th Bimonthly policy by RBI’s MPC is going to be announced on 4th December 2020, Friday. Analyzing the current scenario, RBI might rest their decision to continue with the status quo. However, in my opinion, inflationfigures might be at a higher level, but still, RBI would not consider this as a time to start reversing the policy of low-interest rates as the GDP growth data for the past 2 quarters has been negative and as of now growth is going to take priority over inflation.

For over two weeks, Nifty has remained stuck within the 12730 and 13150 range weighed by lacklustre movement among banking and IT stocks. Among sectors, commodity-related stocks have continued outperforming, partly underpinned by the dollar's broad-based weakness. Meanwhile, broader markets have remained firm, but the rally is showing signs of fatigue on shorter time frame charts.

Looking ahead, since yesterday, Nifty has failed to surpass last week's high of 13145. That becomes an important resistance now to keep an eye on. On the downside, immediate support lies at 12970, break below which could expose the index for a minor correction towards 12840-12730.