Closing Bell: Sensex falls over 400 points, Nifty ends below 17,900; IT, metals, financials top losers

Nifty fell for the third consecutive session on Jan 06. At close, Nifty fell 0.74% or 132.7 points at 17,859.5. Volumes on the NSE again fell suggesting indecision on the part of traders to trade. Broad market indices continued to bleed as advance decline ratio remained low at 0.51:1.

Asian shares were mixed Friday after Wall Street benchmarks fell on worries that the U.S. Federal Reserve will keep raising interest rates. European stocks struggled to maintain gains on Friday as traders braced for US jobs data due later that will help chart the path forward for Federal Reserve monetary tightening.

Nifty almost tested the recent lows of 17,779 and bounced up a little. On a weekly basis, Nifty lost 1.36% falling in 4 out of 5 weeks and gave up almost the entire gains of the previous week. Nifty on breaching the recent lows of 17,779 could head towards 17,429 while 18,105 could act as a resistance in the near term.

Ranadive, Equity Research Analyst, Choice Broking

Domestic benchmark indices edged lower on Friday, after strong US jobs data indicated the Federal Reserve would have to keep hiking interest rates. Sensex settled at 59,900falling 452. Nifty ended at 17,859 losing 132.70 points. Nifty's breadth has ended on a very negative note as 10 stocks advanced while 40 declined.

The Nifty has managed to close below 18000, an important psychological level, for the last 2 consecutive days, suggesting weakness. A break above 18100-18150 will act as a crucial zone for Nifty to start its upward journey. Bank Nifty too has failed to close above 42200 levels and this weakness has persisted the entire week.

Indicators such as RSI and MACD are losing strength suggesting that this weakness will persist.

Open interest data indicates, on the call side the highest OI was witnessed at 18,000 followed by 18,100 strike prices while on the put side, the highest OI witnessed at 17800 followed by 17700 strike price. On the other hand, Bank Nifty has support at 41,900 levels while resistance is placed at 42,700.

Investor risk sentiment took a blow post the release of the FOMC meeting minutes, which indicated further rate hikes in 2023 to tame inflation. Upcoming key US jobs data is expected to be encouraging which would influence the next Fed’s policy. The market already remains sensitive to FIIs selling and IT stocks traded with deep cuts ahead the release of corporate earnings next week as the growth is anticipated to be muted.

Markets extended decline and lost nearly a percent, tracking weak global cues. After the initial uptick, Nifty traded under pressure for most of the session and almost retested the last month’s low. It witnessed a marginal rebound in the end and finally settled at 17859 levels. The majority of sectoral indices traded in sync with the benchmark and ended lower wherein IT and banking were among the top losers. The broader indices too witnessed a decline and lost in the range of nearly a percent each.

Weak global cues are largely weighing on sentiment in absence of any major trigger from the domestic front. We may see some breather in the Nifty index after the recent slide but the tone is likely to remain negative, citing the weak structure of several index heavyweights. Participants should align their positions accordingly while keeping a check on leveraged trades.

Indian market will continue to exhibit resilience in 2023 continuing the trend from 2022, with manufacturing, electric mobility, infra, and defines as themes doing well. This despite concerns around global slowdown and a possible recession in the West due to unwinding of monetary policy by major global central banks. Specialty Chemicals, Electric Mobility, Infra, Auto, Banking, and Defence will be the key themes to watch out for in 2023 as per Naveen KR, smallcase manager and Senior Director at Windmill Capital.

Escalation of geo-political tensions between Russia-Ukraine, China-Taiwan, and a fresh spike in prices of crude oil are major challenges to global economic and equity growth. In 2022, comparative to most global markets, the Indian markets have managed to be in the positive terrain with gains of 3.02 percent.

The Indian equity markets have begun the new year on a slightly cautious note, in line with the global markets, continuing the trend visible in December 2022. While expectations remain of softer rate tightening by the global central banks from hereon, concerns remain on the overall economic environment amidst the high interest rates and sticky core inflation. 2023 is expected to be ‘the year of cool down’; both growth and inflation rates globally are likely to slow down, as monetary policy normalisation takes its toll and some of the pandemic-related constraints ease.

Overall, the inflation rate is expected to fall more than the growth rates. Indian markets have been one of the best performing markets globally in CY22, aided by its relatively strong growth – both GDP and corporate earnings – and resilient domestic liquidity, a trend likely to continue in CY23 as well. However, in the near term, the markets seem to be running into a few headwinds - record high valuation premium to EMs (although the valuations are only slightly above its own historical averages) which may attract some tactical shifts to other EMs, potential slowdown in exports on the back of global slowdown, and Fixed Income emerging as a viable investment option. Hence, while we continue to remain constructive on the markets, we believe there could be several interim opportunities in the near term as the markets adjust to the headwinds.

Early updates of select private sector banks show that the low-cost current and savings account deposits have remained stagnant during Q3FY2023, an indication of a shift to term deposits by customers... Read More