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Taking Stock | Indices’ three-day winning streak hits a bump; Nifty ends below 16,600, Sensex loses 359 points

Experts suggest that the changes in policy by central banks would be a major factor to be monitored in the coming days to get a sense of direction

May 31, 2022 / 06:23 PM IST
Representative image.

Representative image.

Indian indices broke their three-day winning streak on May 31 even as most of the Asian peers ended the day on a strong note. The rise in crude prices and its cascading effect on the worsening situation due to inflation deterred investors from equity markets today. The crude prices edged beyond $120 per barrel amid tight supply after the European Union announced further cuts in oil imports from Russia by the end of this year.

After a volatile closing session, the 30-pack BSE Sensex ended the day with a loss of 359.33 points or 0.64 percent at 55,566.4 while the Nifty ended the day 76.85 points or 0.46 percent lower at 16,584.55.

“Domestic market failed to hold on to recovery mode as it was awaiting the release of Q4 GDP data which is expected to register a slower growth rate of 4.0-4.2 percent as the consumer spending and investments were hit by soaring inflation,” said Vinod Nair, Head of Research at Geojit Financial Services.

“A hike in oil prices due to the European Union’s ban on Russian oil imports would act as a headwind in taming global inflation,” added Nair.

Apart from the crude impact, investors also turned wary before the release of some important economic data which include gross domestic product (GDP) and fiscal deficit data as well as the RBI monetary policy that is due next week.

Close

“Changes in policy by central banks would be a major factor to be monitored in the coming days,” Nair said.

The market sentiments were weak since the beginning of the day as both the indices opened 0.5 percent lower compared to their previous close. The BSE Sensex had a gap-down opening of 303.74 points at 55,622 against the previous close of 55,925.74. Bulls tried their best to retrieve the lost ground but could just manage to kiss the previous day’s closing level during the afternoon session, which was also the day’s high. The day’s low was 55,369.14.

The Nifty too opened with a loss of 0.5 percent or 83 point at 16,578.45 and lost further ground to make an intra-day low of 16,521.9 before the bulls briefly clawed it back beyond the previous day’s close to make an intra-day high of 16,690.75.

IndexPricesChangeChange%
Sensex53,234.77326.84 +0.62%
Nifty 5015,835.3583.30 +0.53%
Nifty Bank33,940.90401.45 +1.20%
Nifty 50 15,835.35 83.30 (0.53%)
Mon, Jul 04, 2022
Biggest GainerPricesChangeChange%
HUL2,375.2092.85 +4.07%
Biggest LoserPricesChangeChange%
JSW Steel551.50-27.35 -4.72%
Best SectorPricesChangeChange%
Nifty FMCG39755.651029.80 +2.66%
Worst SectorPricesChangeChange%
Nifty Metal4649.95-46.55 -0.99%

Stocks and Sectors

The weakness in markets impacted the sectoral indices as well as they ended on a mixed note for the day. Leading the pack of gainers was Nifty Realty which continued its good show from the previous day and gained 2 percent. This was followed by Metals which gained more than 1 percent while Auto made gains of 0.83 percent.

The broader markets too had a mixed outing with some sectors ending in the red. However, BSE Midcap maintained its positive run as it gained 0.49 percent and BSE Smallcap was higher by 0.68 percent.

The India VIX, which indicates the degree of volatility traders expect over the next 30 days, was higher by 2.48 percent rising from 19.98 to 20.48.

The top gainers on the Nifty today were ONGC, M&M, NTPC, Coal India and JSW Steel which gained between 2.3 percent and 5 percent.

Sun Pharma, Kotak Mahindra, HDFC, Titan Company and HDFC Life were the top Nifty losers, each losing between 1.63 percent and 3.12 percent.

Among specific stocks, a long build-up was witnessed in Naukri (Info Edge), Piramal Enterprises and MCX while a short build-up was seen in Aarti Industries, Metropolis Healthcare and Glenmark Pharmaceuticals.

Of the 3,187 stocks traded on the BSE, there were 1,931 stocks that advanced today, 1,136 stocks declined while 120 stocks remained unchanged today.

Outlook for June 1

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities

Profit-booking at higher levels dragged the benchmark indices in an otherwise clueless market. With corporate earning seasons nearing an end, traders have started hunting for new clues to drive the market. Also, a lot of shift in portfolios is happening.

Reality and Media continued the positive momentum whereas Banking and Energy stocks registered profit booking at higher levels. Technically, a double top formation on intraday charts and Doji candlestick formation on daily charts indicate further weakness from the current levels.

We are of the view that in the near future 16,700 (55,925 on the BSE Sensex) would act as a key resistance level for the traders. Below which the Nifty could retest the 16,450-16,400 (54,900-54,700 on BSE Sensex).

On the flip side, a fresh uptrend rally is possible only after the Nifty crosses the 16,700 (55,925 on BSE Sensex) range breakout, above which it could move up to 16,775 (56,200 on BSE Sensex).

The larger texture of the market is still on the positive side. Hence, contra traders can take a long bet near 16,400 on the Nifty (54,700 on BSE Sensex) with a strict stop loss near 16,350 on the Nifty (54,550 on BSE Sensex).

Ajit Mishra, VP- Research, Religare Broking Ltd

Markets took a breather after the recent rebound and ended marginally lower in a range-bound session. After the initial downtick, the benchmark hovered in a narrow band and settled closer to the day’s low. Consequently, the Nifty index ended lower by 0.5 percent to close at 16,584 levels. Meanwhile, mixed trends on the sectoral front and outperformance of the broader market kept the participants busy. Among sectors, metal, auto and capital goods ended with gains whereas oil and gas and banking were the top losers.

Markets will react to the GDP numbers in early trades on Wednesday. Besides, auto sales numbers would also start pouring in, which may provide some insight into the demand scenario. On the global front, the recent surge in crude oil prices has turned the participants cautious. Keeping all in mind, we suggest maintaining focus on sector/stock selection while keeping a check on leveraged positions.

Disclaimer: The views and investment tips of 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.

 

 
Gaurav Sharma
first published: May 31, 2022 04:53 pm
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