Closing Bell: Sensex, Nifty end marginally lower amid volatility; auto, realty drag

Nifty closed marginally in the negative after recovering sharply from the morning lows on December 20. Nifty recovered post noon after the negative effect of the unexpected hawkish move by Bank of Japan to widen the band of long term yields, withered off. Nifty closed 0.19% or 35.2 points lower at 18385.3.

Global markets fell after the Bank of Japan unexpectedly changed its ultra-dovish stance and tweaked its bond yield controls - a move that will allow long-term interest rates to rise more.

Low market volumes have led to higher intra day volatility in the markets. Nifty could now remain in the 18,269-18,441 band in the near term and a breach of this band could result in accelerated move in that direction.

After a low volatility in 2022, rupee and almost all currencies may witness huge volatility in 2023. In 2022, USDINR had rallied nearly 10% to an all time high of 83.25 on spot.

We could see prices form a sideways to upward range in the new year. We expect an overall range of 79.50 and 86.50 on spot in 2023.

The Bank of Japan shocked global markets in a totally unexpected move by raising the upper band limit for the 10-year yield to 50 bps, which is seen as a step towards a hawkish policy shift. This has aggravated the sell-off in the global market, which was already risk-averse due to mounting recessionary fears following the Fed's comment.

In this backdrop, the US GDP numbers expected on Thursday will provide a picture of the strength of the US economy.

Markets struggled through the session and ended in red due to weak global cues, but managed to recoup most of its early losses. The choppy trend can be attributed to lack of fresh positive triggers. Also investors are awaiting the release of the minutes of the RBI's recently concluded monetary policy on Wednesday, which could give some clarity on the central bank's likely course of action in the near term.

Technically, after early morning sharp intraday selloff the index took support near 18,200 and recovered from the day's low level.

Currently, the market is witnessing a non-directional activity and perhaps traders are waiting for either side breakout. For bulls, 18,450 would be the important breakout level to watch. And if the market manages to trade above the same, then we can expect a quick uptrend rally towards 18,550-18,600. On the flip side, trading below 18,200 may increase further weakness up to 18,100-18,050.

Indian rupee closed marginally lower at 82.75 per dollar against previous close of 82.70.

Benchmark indices ended marginally lower on December 20 with Nifty below 18,400.

At Close, the Sensex was down 103.90 points or 0.17% at 61,702.29, and the Nifty was down 35.20 points or 0.19% at 18,385.30. About 1646 shares have advanced, 1780 shares declined, and 126 shares are unchanged.

SBI Life Insurance, Eicher Motors, UPL, Tata Motors and HUL were among the biggest Nifty losers, while gainers were Adani Enterprises, TCS, Reliance Industries, Axis Bank and IndusInd Bank.

Among sectors FMCG, auto, and realty ended 0.5-1 percent lower.

The BSE midcap and smallcap indices ended on flat note.

Gold prices jumped 1% to above the key USD 1,800 level on Tuesday as the dollar dropped to session lows after the Bank of Japan's surprise policy tweak, while markets also weighed the outlook for the U.S. Federal Reserve's interest rate strategy.

Spot gold was up 0.8% at USD 1,802.11 per ounce by 0925 GMT. U.S. gold futures rose 0.8% to $1,812.50.

The initial public offering (IPO) of Elin Electronics was subscribed 19 percent on December 20, the first day of bidding. The issue garnered bids for 26.92 lakh shares against 1.42 crore shares on the offer.

Retail investors bought 32 percent shares of the allotted quota, while high networth individuals (HNIs) bid for 14 percent shares of the portion set aside for them.

Qualified institutional buyers (QIBs) put in bids for 2,520 shares as against 40.59 lakh shares reserved for them.

The public issue of KFin Technologies so far has seen muted response from investors on December 20, the second day of bidding. The offer has garnered bids for 1.57 crore shares against IPO size of 2.37 crore shares, getting subscribed 66 percent.

Qualified institutional investors, who have been allotted 75 percent of the offer, have bought 1.02 times the reserved quota.

Retail investors have bought 57 percent of the portion set aside for them, while there has been muted interest from high networth individuals who have subscribed just 2 percent of their quota. Up to 15 percent of the total offer is reserved for high networth individuals and the balance 10 percent for retail.