Taking Stock | Nifty around 18,500, Sensex falls 389 points as IT stocks tumble

After briefly pausing for a day, the market again witnessed profit booking with benchmark indices slipping 0.6 percent on December 9 mostly dragged by the IT majors, with HCL Technologies' management indicating that FY23 revenue growth will be at the lower end of earlier guidance.

At close, the Sensex was down 389.01 points or 0.62 percent at 62,181.67, and the Nifty was down 112.70 points or 0.61 percent at 18,496.60.

On the back of supportive global cues, the market started on a positive note, but immediately erased early gains and turned negative and extended the losses as the day progressed. However, last-hour buying helped to trim the losses.

Also Read - HCL Tech biggest index loser after management indicates lower growth in FY23

Stocks and sectors

HCL Technologies, Tech Mahindra, Infosys, Wipro and Hindalco Industries were among the top Nifty losers, while gainers were Nestle India, Sun Pharma, Dr Reddy's Laboratories, Titan Company and Eicher Motors.

Among sectors, Nifty information technology index shed 3 percent, PSU bank, metal and energy indices were down 1 percent each. However, FMCG index gained nearly 1 percent.

BSE midcap index fell 0.4 percent and smallcap index slipped 1 percent.

On the BSE, information technology index fell 3 percent, realty index declined 1.5 percent, metal index shed 1 percent, power index declined 0.9 percent, oil & gas index fell 0.89 percent and capital goods index was down 0.6 percent. On the other hand, FMCG index added 0.7 percent.

Among individual stocks, a volume spike of more than 500 percent was seen in HCL Technologies, Cummins India and Punjab National Bank.

A short build-up was seen in HCL Technologies, Intellect Design Arena and Birlasoft, while a long build-up was seen in Cummins, Godrej Consumer Products and Nestle India.

UCO Bank, V-Guard Industries, South Indian Bank, Shalby, L&T, Axis Bank, Bank Of Maharashtra, Kalpataru Power Transmission, Gravita India, Central Bank Of India, a touched their 52-week high on the BSE.

On the other hand, Bedmutha Industries, Hester Biosciences, Inox Green Energy Services, Matrimony.Com and Sudarshan Chemical Industries.

Outlook for December 12

Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities

Profit taking was back in action as investors dumped IT, metal and realty stocks, even as benchmark Sensex still managed to end above the psychological level of 62000 mark. The recent trend indicates that markets may continue to exhibit intra-day volatility as investors keenly await the outcome of the US Fed's decision on interest rate next week. More than the rate hike, investors would be more interested in knowing about the forward looking statement on inflation and rate decision going ahead.

Technically, the lower top formation on intraday charts and bearish candle on weekly charts is indicating further weakness from the current levels.

For short-term traders, the 20-day SMA (Simple Moving Average) or 18,450 would act as a sacrosanct support zone, above which, we could expect a one pullback rally till 18,700. On the flip side, below 20 day SMA or 18,450, further sell off is possible till 18,300-18,200.

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas.

The Nifty posted a negative weekly close in the last week after hitting an all time high in the penultimate week. In the last session, the index breached the support zone of 18,600-18,500 on a closing basis.

On the daily chart, it formed an Engulfing bear candle for the last session. In terms of the bar patterns, the index has formed a Popgun pattern. Also, there is a breach of rising channel on the daily chart. Thus the Nifty looks poised for a short term consolidation. 18,300-18,650 is expected to be the short term consolidation range.

Ajit Mishra, VP - Technical Research, Religare Broking:

Markets drifted lower and lost over half a percent amid mixed cues. After the flat start, the Nifty index gradually inched lower for most of the session however marginal rebound in the last hour trimmed some losses. It finally settled at 18,496.60 levels; down by 0.61 percent.

The pressure was board-based but a sharp decline in the IT majors was largely weighing on the sentiment.

Indications are in the favour of prevailing consolidation to continue and sustainability above 18,300 in Nifty is critical to maintain the positive tone. Among sectors, banking and FMCG look promising while others may contribute selectively. Traders should plan their positions accordingly.

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