The equity benchmark indices Sensex and Nifty gave up early gains and turned volatile on Wednesday, dragged by profit booking at higher levels amid mixed global cues.
The Sensex, which opened higher at 84,487.34, gained 213.42 points or 0.25 percent in early trade. However, the rally was short-lived as the index pared all the gains and settled at 84,233.64, down 40.28 points or 0.048 percent.
Similarly, the broader Nifty crossed the 26,000 mark in early trade but failed to sustain the momentum. It closed flat at 25,953.85, up 18.70 points or 0.072 percent.
Coal India, Hindalco Industries and Trent were among the major laggards in the Nifty50 pack, declining up to 2 percent, while Eicher Motors and Apollo Hospitals Enterprise were the top gainers, rising up to 7 percent.
1) Profit booking: Profit booking was witnessed in key sectors such as IT, PSU banks and realty shares. Extending its 3-day rally on Tuesday, the Sensex climbed 208.17 points to settle at 84,273.92, while the Nifty rose 67.85 points to finish at 25,935.15.
2) Rupee declines: The rupee weakened against the US dollar, adding to cautious sentiment. The domestic currency depreciated 6 paise to 90.62 against the US dollar in early trade on Wednesday amid geopolitical tensions and dollar demand from importers. At the interbank foreign exchange market, the rupee opened at 90.56, touched an early high of 90.46, but later slipped to 90.62, down 6 paise from its previous close.
3) Weak US markets: Weak cues from global markets further weighed on investor sentiment. US equities ended lower overnight on Tuesday as investors reacted to weaker-than-expected retail sales data and awaited a key labour market report. US retail sales remained unchanged in December, reflecting subdued consumer spending on big-ticket items.
4) Crude rises: Rising crude oil prices contributed to the cautious mood. Brent crude, the global oil benchmark, climbed 0.76 percent to USD 69.32 per barrel. Higher crude prices tend to stoke inflation concerns in India and weigh on the current account outlook.
5) Resistance at 26,000-level: On the technical front, analysts pointed to resistance levels limiting the upside. "Short-term resistance for the Nifty is seen near 26,000, above which the index could extend the rally towards a fresh all-time high above 26,373. On the downside, the 25,600–25,670 band could provide strong support," said Devarsh Vakil, Head of Prime Research, HDFC Securities.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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