The Indian stock market ended the volatile session on a flat note on January 14. After a gap-down opening in the morning, both the benchmark indices recovered losses in the afternoon session and came at par with their previous day's close.
The 30-pack Sensex took cues from the weak global markets, lower US producer’s price index (PPI) data, increased jobless claims amid rising cases of Omicron and United Nations report downgrading India’s GDP growth.
It opened with a loss of 195 points at 61,040.32 points. The sentiment remained negative during the first half of the day and the benchmark slumped 478 points to touch an intra-day low of 60,757.03. Post lunch, the momentum reversed and the index erased its losses to jump 568 points from the day’s low to make an intra-day high of 61,324.59, before settling the day 12.2 points down at 61,223.
The NSE's benchmark Nifty lost 72.8 points at the time of opening at 18,185 points. It lost more ground and dropped 138.15 points to make an intra-day low of 18,119.65. It reversed the fortunes in the afternoon session and jumped 167.3 points from the day’s low to make an intra-day high of 18,286.95. The index eventually closed the day flat with a marginal loss of 2.05 points at 18,255.75.
“Nifty index opened negative and witnessed some consolidation in the initial half of the session. It negated its higher lows formation of the last five sessions but witnessed smart recovery in the last hour”, said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.
Asian markets were also trading in negative territory amid weak signals coming from Wall Street due to rising cases of coronavirus in the US.
“Investor sentiments were hit as a recent report from United Nations predicted India’s GDP at 6.5% in FY22 from its earlier forecast of 8.4%”, said Mohit Nigam, Head - PMS, Hem Securities.
India VIX, which indicates the degree of volatility traders expect over the next 30 days, moved down 0.89 percent from 16.71 to 16.55 levels.
“Volatility is hovering at higher zones signalling swings in the market and needs to cool down for stability” added Taparia.
Asian Paints, Axis Bank, HUL, UPL, and ONGC were the top Nifty losers, falling between 1.8 to 2.7 percent.
Top gainers on the Nifty included Tata Consumer Products, TCS, IOC, Infosys, and L&T which gained between 1.3 to 4.4 percent during the day.
Stocks & Sectors
All sectoral indices ended in the red except Realty (up 1.15 percent) and IT which was up 0.57 percent. FMCG was the top loser - down 0.7 percent.
Broader markets gained ground and ended the day on a positive note overall with BSE Midcap up by 0.22 percent and BSE Smallcap gained 0.5 percent.
A long build-up was seen in RBL Bank, Bharat Electronics, IRCTC while there was a short build-up in Motherson Sumi, Mindtree and Biocon. Among individual stocks, a volume spike of more than 600 percent was seen in RBL Bank, Delta Corp, and Cummins India.
There were 18 declines compared to 12 advances on the BSE Sensex.
Technical View
According to Taparia, “Nifty formed a small-bodied Bullish candle on a daily scale and has been forming higher highs from the last six sessions”.
On a weekly frame, it formed a Bullish candle and has been moving upwards for three weeks. “Now, Nifty has to hold above 18,181, for an up move towards 18,400 levels whereas support is intact at 18,081 and 18,000 zones”, he added.
Outlook for January 17
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd
Bulls powered through the week with renewed optimism as Nifty gained 2.33% and Sensex rallying 2.30%. The current economic scenario is quite similar to the one that existed in the early phase of the 2003-07 cycle and investors are expecting that 2022 can potentially witness the unfurling of India's much-awaited capex cycle.
The Nifty was at 18,219 with gains of ~2.33% and Sensex was at 61,088 with gains of ~2.3% during the end of the week on January 14, 2022.
The Nifty small-cap index outperformed with gains of 2.98% and mid-cap index underperformed with gains of ~2.25% during the week.
All the sectoral indices ended in the green during the week. Healthcare and IT stocks led the rally, while oil and gas and realty were major laggards. BSE Power, BSE Capital Goods, and BSE Power were the top three performing sectoral indices with gains of ~7.01, ~5.91%, and ~5.03%, respectively.
Other sectoral indices including IT, Auto, Metals and Oil & Gas gained 2 to 3%. Bank Nifty gained 1.3%. Indices such as BSE Pharma, BSE FMCG, and BSE Consumer Durables were laggards.
Earnings momentum is likely to continue in Q3FY22 from Q2FY22. Further, given recent events in light of the Omicron variant of Covid, it will be critical to closely listen to the management commentary of various corporates. Most of the positives are already priced in the current valuations and hence investors should bet on the right sectors and select a superior stock offering. A decent risk reward will help generate alpha in 2022.
Mr. Ajit Mishra, VP - Research, Religare Broking Ltd
Markets traded volatile and settled almost unchanged, in continuation to the previous session’s move. Feeble global cues led to a weak start; however, rebound in the select index majors helped the index to pare the losses. Finally, the Nifty index settled at 18,255.75 levels.
Among the sectors, Telecom, FMCG, and Banking ended with losses whereas Capital Goods, Realty and IT ended with gains. Amid all, the market breadth was inclined towards the advancing side, thanks to buoyancy in midcap and smallcap space.
Markets will first react to the results of two heavyweights- HCL Technologies and HDFC Bank in early trade on Monday. We may see further consolidation in the index; however, the bias would remain on the positive bias. Participants should continue with the “buy on dips” approach and focus on sectors that are trading in sync with the benchmark.
Prashant Tapse, Vice President (Research) at Mehta Equities Ltd
Amid volatility, Nifty ended a tad lower and shrugged off weak global cues. After a gap-down start, the benchmark Nifty staged a smart recovery in the late session amid bargain hunting backed by short covering.
The positive takeaway was that Nifty ended a tad below the dotted lines and most importantly, shrugging off depressing overnight Wall Street cues, Asian and European cues, and also taking rise in oil prices at its stride.
Technically, there is likely to be lots of opportunities on the buy-side as long as Nifty stays above the 17,889 mark. The immediate goalpost on Nifty is seen at its all-time high at the 18,605 mark.
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