Investors turned cautious as the RBI’s monetary policy committee began its three-day meeting on June 6, with mixed Asian cues and the rise in crude prices as well as Covid cases weighing on sentiment.
At close, the 30-pack Sensex was down 93.91 points, or 0.17 percent, at 55,675.32, while the Nifty, too, ended flat losing 14.75 points, or 0.09 percent, at 16,569.55.
“Domestic market moved in tandem with the global peers to open weak and gradually recovered its losses following a positive start in Europe,” said Vinod Nair, Head of Research at Geojit Financial Services.
“Oil prices rose after Saudi Arabia raised their selling price, adding to the current global inflationary pressure, while better than expected US job data triggered worries on Wall Street as it gives the Fed more room to hike rates.”
On June 6, European and Asian stocks rose after China relaxed some Covid-19 restrictions, calming markets that have been unsettled by concerns over global central bank rate rises to tackle persistently high inflation, said Deepak Jasani, Head of Retail Research, HDFC Securities.
Experts expect volatility to continue in both global and domestic markets just before the RBI MPC meet outcome on June 8, the ECB meeting the next day and the release of the US inflation data on June 10.
Stocks & sectors
Metal stocks shone bright on an otherwise subdued day for other sectors. The metal index ended 1.12 percent higher. Realty, capital goods and consumer durables indices fell the most.
The BSE smallcap index ended lower by 0.55 percent, while the midcap was down 0.15 percent, suggesting pressure on broader markets. This was also reflected in the negative advance-decline ratio for the day.
As expected, the India VIX, which indicates the degree of volatility traders expect over the next 30 days, went up 1.13 percent from 19.98 to 20.20.
Top gainers on Nifty were Bajaj Auto, JSW Steel, Cipla, ONGC and Tata Consumer Products, closing between 1.29 to 3.93 percent higher.
Stocks of Shree Cements, BPCL, Asian Paints, UltraTech Cement and Hero MotoCorp ended on the losing side, down 1.66-3.08 percent.
Among specific stocks, short build-up was seen in Indiabulls Housing Finance, Coforge and India Energy Exchange, while long build-up was visible in Rain Industries, ICICI Prudential Life Insurance and Balarampur Chini.
Of the 3,557 stocks traded on the BSE, 1,429 advanced, 1,970 declined and 158 remained unchanged.
Outlook for June 7
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd
The market has been exercising caution ahead of the credit policy announcement, hence investors trimmed their position in rate-sensitive sectors such as realty.
Technically, the Nifty found support near 16,450 but failed to capitalise on it. The texture of the chart is indicating that a range-bound activity is likely to continue in the near future.
For day traders, 16500 would be the key support level to watch out, and above which the index could move up to 16650-16750.
On the flip side, a fresh round of selling is possible if the index trades below 16,500. Any further decline could see the index retest 16,400-16,350.
Ajit Mishra, VP-Research, Religare Broking Ltd
Markets were lacklustre and ended almost unchanged amid mixed cues.
The prevailing uncertainty on the global front combined with caution ahead of the MPC meet outcome is keeping the participants on the edge.
Indications are in the favour of further consolidation in the index, so the focus should be on identifying the sectors and stocks and maintaining positions on both sides.
Prashanth Tapse, Vice President (Research), Mehta Equities Ltd
Most of the momentum stocks traded with negative bias. The sentiment was depressed in the backdrop of relentless selling by FIIs.
Denting sentiments were WTI crude oil prices trading near $119 a barrel after Saudi Arabia raised the official selling price of its flagship Arab light crude for Asia and northwest Europe.
The Nifty will lack direction for the next two sessions as the key driver of sentiment hinges on the RBI monetary policy outcome on June 8.
Technically speaking, after today’s consolidation, the downside risk on the Nifty is seen at 16,371. Alternatively, if its make-or-break support at 16,371 holds then bulls can re-group with aggressive targets seen at 16,897-17,250 zone with an inter-week perspective.
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