Taking Stock: Nifty closes below 12K for the first time since Nov 22; time to buy?

Indian market witnessed consolidation for the third consecutive day in a row on Tuesday and closed below 12,000 levels for the first time since November 22.

Let’s look at the final tally on D-Street – the S&P BSE Sensex fell 126 points to 40,675 while the Nifty50 closed 54 points lower at 11,994 on December 3.

Sectorally, the action was seen in Realty, IT, and Consumer Durables while on the losing front profit-taking was seen in sectors like Metals, Infrastructure, Telecom, and Power.

The broader market underperformed as the S&P BSE Midcap index fell 0.95 percent while the S&P BSE Smallcap index was down 0.74 percent.

Investors booked profit amid rising in trade war concerns and ahead of the outcome of the Monetary Policy Committee meeting on December 5. Despite the recent profit-taking the long term trend still remains intact and investors should use the dip to buy into quality stocks.

“Investor sentiments in the near-term are likely to be muted given the weak macro data. Further, RBI monetary policy on December 5 will be crucial as at least 25 bps rate cut is expected as the central bank is likely to place economic growth on the forefront despite higher inflation,” Ajit Mishra, VP - Research, Religare Broking Ltd told Moneycontrol.

“On the global front, the recent tariffs by the US on steel imports from Brazil and Argentina may make investors jittery over global trade concerns. We suggest buying on dips approach amidst market volatility,” he said.

Top Nifty gainers include TCS, Bajaj Finserv, and Bajaj Auto

Top Nifty Losers include Tata Steel, Bharti Infratel, and Yes Bank.

Stocks & Sectors:

Sectorally, the S&P BSE Realty index was up 1.3 percent followed by the S&P BSE IT index which was up 0.59 percent, and the Consumer Durable index closed 0.09 percent higher.

Profit-taking was seen in sectors like Metal which was down 2.6 percent, followed by the S&P BSE Telecom index which fell 1.76 percent, and the S&P BSE Power index was down 1.3 percent.

Volume spike of 100-400 percent was seen in stocks like Hexaware, Jubilant FoodWorks, Jindal Steel, and Bata India

Long Buildup – Torrent Pharma, NMDC, Bajaj Auto, Kotak Bank

Short Buildup – Hexaware, Biocon, Jindal Steel, REC

Stocks in news:

RBL Bank share price declined close to 2 percent on December 3 after the company launched the qualified institutional placement (QIP) issue for subscription on December 2.

Jaypee Infratech share price ended 4 percent higher after Yes Bank filed an insolvency petition against its subsidiary Jaypee Healthcare before the Allahabad bench of the National Company Law Tribunal (NCLT).

Reliance Power shed over 4 percent on December 3 after it said its 10.19 crore pledged shares having a total face value of Rs 101.9 crore have been invoked by Reliance Infrastructure on December 2, 2019.

Metal stocks took a beating after US President Donald Trump said he would restore tariffs on metal imports from Brazil and Argentina.

Maruti ended flat despite co announcing plans to raise vehicle prices

Technical View:

Nifty formed a bearish candle for the third consecutive day in a row

Closed below 5-Days EMA, and 13-DMA| It bounced back from 20-DMA placed at 11,974

The advanced declined ratio appears to be majorly favoring bears as two stocks declined for every single stock

The index shall continue to remain vulnerable for a sell-off going forward unless it shows some signs of strength which can be expected on a close above 12068 levels which is the intraday high of Tuesday

A breach of 11950 in the next trading session can initially drag down the index towards 11880 levels.

Traders are advised to remain cautious and should consider creating a fresh short position below 11950 and look for a target of 11880 with a stop above intraday high, suggest experts.