Indian equity benchmarks continue to be spooked by surging bond yields, FII selling and mixed global cues as both the indices slumped for the fourth consecutive day on January 21, losing more than 0.5 percent each in a volatile session.
The volatility can be gauged from the fact that the 30-pack BSE Sensex traded in a range of more than 700 points during the day, while the Nifty swung by more than 200 points.
The Sensex ended the day 427.44 points, or 0.72 percent, lower at 59,037.18, and the Nifty was down 139.85 points, or 0.79 percent, at 17,617.15.
The negative sentiment continued as the market opened lower. The Sensex opened 425 points down at 59,039.37 and lost more ground amid volatility to dip to an intra-day low of 58,620.93. The Nifty sank to the day’s low of 17,485.85 after opening 143.3 points in the red at 17,613.7.
Markets recovered in the afternoon session, with the Sensex touching an intra-day high of 59,329.63 and the Nifty 17,707.6.
“The Nifty index opened gap down and headed to it crucial support of 17,500 zones. It moved in a range bound manner with weakness but slight recovery was seen towards the end,” said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.
''The ongoing selling by FIIs and weak Indian rupee forced the domestic market to continue surrendering its gains, with all major sectors trading under pressure”, said Vinod Nair, Head of Research at Geojit Financial Services.
Weak sentiments from global markets due to persistent inflationary worries and weaker-than-expected earnings also added to the selling pressure.
Along with global disturbances, uncertainties regarding the Budget will likely keep the domestic market highly volatile in the coming days, Nair added. The budget is to presented on February 1.
Stocks and sectors
On the NSE, all sectoral indices ended in the red except FMCG, which gained 0.36 percent. Media and PSU banks were the biggest losers, with a decline of 3.47 percent and 3.05 percent, respectively. The Nifty realty index was down 2.36 percent, while others were down between 0.5 to 2 percent.
On the BSE also, all sectoral indices closed below the previous day’s close.
The broader markets, too, closed in the red. The BSE midcap index lost 2.0 percent and smallcap 1.96 percent.
India VIX, which indicates the degree of volatility traders expect over the next 30 days, moved up 6.16 percent from 17.79 to 18.89 levels.
“Volatility surged to higher zones signalling wild swings in the market,” Taparia said.
Bajaj Finserv, Tech Mahindra, Shree Cements, Coal India and Divis Labs were the top Nifty losers, down 5.35 to 3.5 percent.
Top gainers on the Nifty were Bajaj Auto, Hindustan Unilever, Maruti Suzuki, Hero Motocorp and Nestle, which gained between 3.36 and 1.30 percent.
Long build-up was seen in Bajaj Auto, Biocon and Hindustan Unilever, while short build-up was seen in Polycab, Balrampur Chini and Deepak Nitrite.
Among individual stocks, a volume spike of more than 2,300 percent was seen in SAIL, while Sun TV and Idea saw a volume spike of about 700 percent.
On the BSE, of 3,466 stocks traded, 2,358 declined, 1,020 advanced, while 88 remained unchanged.
Outlook for January 24
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd
Indian markets corrected this week in line with a global market selloff. The rise in US bond yields and the expected tightening of monetary policy by central banks is weighing on investor sentiments. The 10-year US treasury yield moved up to hit a two-year high this week.
The BSE 30 and the Nifty corrected around 3 percent during the week. Despite the weak market condition, the BSE smallcap index hit a new high this week and outperformed the large indices.
In line with broader markets, most sectors saw profit booking. IT sector performed poorly this week, with a negative return of around 6 percent.
Crude oil prices continue to march forward with Brent crude inching towards $90 a barrel.
FIIs are turning out to be net seller in the January. Inflationary pressure, monetary policy tightening, rising bond yields and higher crude oil prices are some key challenges for the global markets.
In addition to global factors, the domestic markets will track the Q3FY22 results, management commentary and the budget.
Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas
The Nifty posted a negative daily close for the fourth consecutive session. It witnessed a tough battle between the bulls and the bears, which resulted in a Doji candle on the daily chart.
The index breached the 38.2 percent retracement of the Dec–Jan rally on an intraday basis but received strong support as it approached 17,500. It managed to hold on to the key Fibonacci level, which is at 17610, on a closing basis.
The hourly momentum indicator got pushed into the oversold zone, where it has developed positive divergence and is looking for a recovery.
These indicators show that the index is at the far end of the short-term correction and can attempt a bounce back.
On the higher side, 17,700-17,800 is the immediate resistance. Once that is crossed, the index can test 18,000. On the flip side, immediate support zone is at 17,600-17,500
Ajit Mishra, VP-Research, Religare Broking Ltd
The market continued to decline for the fourth straight session on account of weak global cues. The Nifty managed to recover some of its losses in the last hour of the trade but still ended with a cut of around 0.8 percent at 17,617 levels.
The broader markets underperformed the benchmarks. Both midcap and smallcap indices ended lower by 1.9 percent each. Among sectors, all indices except FMCG ended in the red. Consumer durables, capital goods and realty were the top losers.
Markets will react to the earnings of two heavyweights- Reliance Industries and ICICI Bank in the early trade on January 24. Weak global cues are weighing on the sentiment and excessive volatility due to earnings is further adding to the participants’ worries.
On the index front, the Nifty should hold 17,600 for a meaningful recovery or it may further slide to 17,350. We prefer hedged positions and suggest keeping a check on position size until the market stabilises.
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