Sensex, Nifty in red amid rising yields, dollar, range-bound trade may continue

Market observers expect this rangebound momentum to continue in the next few sessions as investors await fresh triggers.

The market erased its opening gains to trade in the red on January 8 morning deals amid sombre trends seen in other Asian markets. The risk-appetite of investors diluted within the first hour of trade after rising treasury yields or dollar rates cast a lull overseas.

At 9:55am, the BSE Sensex and NSE Nifty 50 declined 0.2 percent each to 71,824 and 21,651 levels.

Going ahead, market observers expect this rangebound momentum to continue in the next few sessions as investors await fresh triggers. Later this week, India Inc will kick-start the Q3 earnings season, while the US and India will release its retail inflation figures.

"We could see some consolidation but many other triggers like India's GDP growth of 7.3 percent and strong Q3 business updates may cap the downside," Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services, told Moneycontrol.

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Deven Mehta, derivative analyst at Choice Broking, believes that the Nifty 50 could find immediate support between 21,600 and 21,620 and resistance between 21,800 and 21,850. "A significant breach of 21,850 could drive the index to 22,000, while a break of the same level might send it to 21,500," he said.

Globally, the 10-year US treasury yields was back above the 4 percent-mark following better-than-expected jobs data. According to the report, employers added more than 2 lakh jobs in December as against economists' expectations of 1.7 lakh jobs.

"After a solid US jobs report, rate cut hopes have been pushed to June, instead of March," noted Khemka of Motilal Oswal. While some consolidation or 'pause' may be expected on the back of this, analysts believe that correction will make domestic markets healthy.

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At this time, VK Vijayakumar, chief investment strategist at Geojit Financial Services, suggested long-term investors to use any dips in the market to buy high-quality banking stocks which are fairly priced.

Broader indices Nifty Midcap 100 and Nifty Smallcap 100 underperformed the benchmark to slip up to 0.4 percent, while the fear gauge India VIX inched up by 4 percent to 13 levels.

Apart from Nifty Realty, Auto, and Oil & Gas, all sect0oral indices traded in the negative territory. Nifty FMCG and PSU Bank indices emerged as top laggards in Monday's trade, slipping 1 percent each.