Closing Bell: Sensex, Nifty erase early gains to end flat on profit booking in RIL, financials

Taking Stock: Sensex wipes out gains in second half; Wipro zooms; RIL sees profit-taking

On the broader markets front, the S&P BSE Midcap index fell 0.35 percent while the S&P BSE Smallcap index was down 0.05 percent.... Read More

The short term trend of Nifty is weak. Wednesday's higher levels weakness could signal a possibility of more declines in the short term. Any intraday upmoves could run into resistance. The selling momentum is expected to be picked up on a slide below 10550. The down side targets for Nifty to be watched around 10350-10300 for the next one week. Immediate resistance is placed around 10750-10800 for the next few sessions.

Technically, with the Nifty selling off sharply from the highs of the day, the bears do seem to have an upper hand. Further downsides are likely once the immediate support of 10577 is broken. Any pullback rallies could find resistance at 10712.

It was a roller coaster ride for the markets as the benchmark swung sharply on both sides and finally ended on a flat note. In the first half, the buoyancy of the global markets led a firm start which further strengthened as the day progressed. However, significant selling pressure witnessed in the latter half due to weakness in banking stocks and a sharp decline in the index heavyweight Reliance Industries.

Mukesh Ambani yet again delivers an impactful AGM with a slew of new initiatives, exhibiting its vision on 5G for the years to come while its stock failed to surprise the market participants. The company presents itself as a technology company led by Reliance JIO Platforms, which on boards another big investor - Google who will invest Rs 33,737 crore for a 7.7% stake.

Jio Mart is expected to be the next big trigger for the company as it is built on a powerful tech platform and has the widespread network of Reliance Retail to expand on. On the Oil to Petrochem business, its deal with Saudi-Aramco having been postponed due to unforeseen conditions comes in as a negative. However, overall the capital raise from selling over 33% stake in Jio Platforms, rights issue of Rs 53,124 crore and stake sale worth Rs 7,500 crore to British energy giant BP in the petro-retail joint venture has helped Reliance achieve its net debt free status earlier than its target, making its balance sheet very robust.

The stock price of Reliance has witnessed a decline towards the end of the AGM since most of the news was already priced in and there were not many surprises. Hence it will see some correction to levels of Rs 1750 in the short term but the long-term growth trend is still intact for this stock.

Nifty has been facing major resistance in breaking through its 200-dma at 10850, and a major contributing factor to this weakness has been a break of uptrend in Bank Nifty & the Financial Services indices, as these are the largest weights in Nifty and Nifty 100. While institutional participation has gone up this week, overall market volumes continue to be driven by high retail participation – last week’s 13.5% institutional participation in market volumes was the lowest in the last 2 years. Moreover, both DIIs and FIIs have been sellers in aggregate for the last week and this week thus far – hence, market sentiment appears weak overall. IT and Pharma stocks continue to be relative outperformers, while Banks are the weakest sector.

Nifty 50 has been consolidating in the range of 10550-10900. Mixed activity was seen across sectors. FMCG, IT and Metals trade strong while banking remains weak. Nifty has strong support at 10550, above which it trades strong. Only a breach of the same is expected to invite selling pressure. Advice traders to remain long with mentioned support at 10900/11100 levels on the higher side.

Gold had a remarkable performance in the first half of 2020 with around 17% returns in the US Dollar terms and the COVID-19 Pandemic is having a devastative effect on the performance of the global economy. There are talks of V shaped recovery shifting towards U shaped recovery or even a W shaped recovery, if the pandemic causes destruction in the form of a second wave of infections. Whatever the scenario, one thing is for certain that the IMF is currently projecting a 4.9% contraction in global growth which certainly is a spoon feed for global investors to move towards safe haven. Gold has the potential for further double digit performance in the second half of 2020.

Markets gyrated to Reliance today as its first Virtual AGM was a widely watched event with plenty of action across its verticals. While Technology stocks led the charge in the first half, profit booking seen in Reliance during the second half created market volatility.

Benchmark indices ended on flat note on the back of final hour selling seen in the infra, financial and especially in Reliance Industries. However, gains in the IT pack has limit the fall.

At close, the Sensex was up 18.75 points or 0.05% at 36051.81, and the Nifty was up 10.80 points or 0.10% at 10618.20. About 1083 shares have advanced, 1503 shares declined, and 156 shares are unchanged.

Wipro, Infosys, HCL Tech, Tech Mahindra and TCS were among major gainers on the Nifty, while losers included Reliance Industries, Bharti Airtel, Zee Entertainment, GAIL and Bharti Infratel.

Among sectors, energy, infra and PSU bank ended lower, while buying witnessed in the IT, pharma, FMCG and Auto space.

The markets failed to keep above the 10750 level which was a resistance point. We are again threatening to enter a range bound movement between 10550 and 10850. We would need to go past either for a definite trend to emerge.

Benchmark indices erased all the early gains with Nifty around 10600.

The Sensex was down 82.11 points or 0.23% at 35950.95, and the Nifty was down 4.60 points or 0.04% at 10602.80.

Due to unforeseen circumstances and COVID-19, the deal with Saudi Aramco has not progressed as per the earlier timeline. We are committed to a long-term partnership with Saudi Aramco.