Indian equity benchmarks ended mixed in yet another volatile session on February 2 despite the budget, presented a day earlier, being hailed as growth-oriented, as the selloff in Adani group stocks continued to roil the market.
The 30-pack Sensex gained 224.16 points, or 0.38 percent, to close at 59,932.24, while the broader Nifty was down six points, or 0.03 percent, at 17,610.40.
The market opened lower, with the Nifty slipping below 17,500 but recovered soon after and traded flat for most part of the session. Last hour buying, however, helped the Sensex to cross 60,000 and close near the level.
"Despite a growth-oriented budget, drop in crude prices and upside in the global market, the domestic market is not able to gain because of the Adani saga having a ripple impact on the investors," said Vinod Nair, Head of Research at Geojit Financial Services.
Premium valuations continue to weigh on the Indian market compared to other emerging markets, which are expecting upside in the economy. The global markets are positive in assumption of being in the last phase of the rate hikes, he added.
Adani Group stocks locked in lower circuit
The sell-off in Adani group stocks intensified, with most of them hitting the lower circuit, a day after flagship Adani Enterprises cancelled its follow-on public offering (FPO).
Adani Enterprises will return money to its investors amid ongoing controversy after American short-seller Hindenburg Research accused the company of using tax havens and flagged debt concerns in a report.
Also Read: RBI looking at banks' exposure to Adani group companies, seeks present status: Sources
On February 2, Adani Transmission, Adani Green Energy, Adani Total Gas, Adani Power and Adani Wilmar hit 5-10 percent lower circuit.
Adani Enterprises and Adani Ports and Special Economic Zone fell 26 percent and 6.5 percent, respectively.
Stocks and sectors
ITC, Britannia Industries, IndusInd Bank, HUL and Infosys were among the biggest gainers on the Nifty, while losers included Adani Enterprises, Adani Ports, UPL, HDFC Life and Divis Labs.
On the sectoral front, Nifty FMCG and Information Technology indices gained 1.8 and 2.2 percent. The metal index fell 4.3 percent and the energy index shed 2.2 percent.
The BSE midcap and the smallcap indices ended marginally higher.
On the BSE, the power index declined 3.4 percent, oil and gas 2 percent and the metal index fell 0.9 percent. The information technology index, however, rose 1.6 percent and the FMCG index added 2 percent.
Adani Enterprises, Adani Green Energy, Adani Ports, Adani Transmission, 3I Infotech, Embassy Office Parks REIT, Nahar Spinning Mills, Zee Media Corporation and Relaxo Footwears were among the stocks to slip to a 52-week low on the BSE.
Among individual stocks, a volume spike of more than 100 percent was seen in LTIMindtree, Birlasoft and Dr Lal PathLabs.
A long build-up was seen in IDFC, Can Fin Homes and IDFC First Bank, while a short build-up was seen in Adani Enterprises, Birlasoft and Adani Ports.
Outlook for February 3
Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas
The Nifty witnessed swings in both directions on February 2 and ultimately posted a minor negative close. Despite multiple attempts, the index couldn’t sustain in the positive territory.
The hourly chart shows that the 20 HMA acted as a cap on the higher side, whereas the hourly lower Bollinger Band offered support to the index.
Thus, 17,650 – 17,450 is the tight range within the overall short-term range of 17,350-18,000. The bulls can get some relief if the index crosses 17,650-17,700.
Shrikant Chouhan, Head, Equity Research (Retail), Kotak Securities
The rout in Adani group stocks continued to play havoc as benchmark indices gyrated sharply before recouping lost ground on buying in IT and banking stocks. However, power, energy, oil & gas, and utility stocks were plundered as investors continued to exit in view of dampening sentiment. More than external factors, investors' sentiments have been hurt by the domestic mood.
Technically, the Nifty hovered between 17,450 and 17,650 range and formed an inside body candle on the daily charts, which indicates the continuation of range-bound activity in the near future.
A pullback rally is possible if the index trades above 17,500. From there, it can move to 17,700-17,750. A fresh selloff is possible on the dismissal of 17,500 and below it, the index can retest 17,380-17,350.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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