Taking Stock | Sensex down 208 points, Nifty slips below 18,650; all eyes on RBI policy

The Indian equity market extended losses for the third day in another volatile session on December 6, a day ahead of the outcome of the RBI's monetary policy committee meeting which may signal slowing of rate hikes.

At close, the Sensex was down 208.24 points, or 0.33 percent, at 62,626.36, and the Nifty slipped 58.20 points, or 0.31 percent, to 18,642.80.

Amid weak global cues, the market started on a negative note and remained under pressure throughout the session. Last-hour buying in PSU bank and FMCG names helped narrow the losses.

"Investors mostly remained on the sidelines as they preferred waiting for the RBI monetary policy announcement. The Nifty found support around the previous low before closing a bit higher," said Rupak De, Senior Technical Analyst at LKP Securities.

The trend will be sideways as long as the index remains within the 18,600-18,800 band. A decisive move on either side will induce a directional move, he added.

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Stocks and sectors

BPCL, Tata Steel, Hindalco Industries, Dr Reddy's Laboratories and UPL were among the top Nifty losers. The gainers included Adani Enterprises, HUL, Bajaj Auto, Nestle India and Power Grid Corporation.

On the sectoral front, the information technology (IT) index fell 1.45 percent and metal and pharma indices were down 0.5 percent each. The PSU bank index gained 1.26 percent, while FMCG and energy indices were up 0.3 percent each.

BSE midcap and smallcap indices ended in the red.

On the BSE, metal and IT indices shed a percent each. Healthcare and realty were down 0.5 percent each. The power index gained a 1 percent and the FMCG index 0.3 percent.

Among individual stocks, a volume spike of more than 200 percent was seen in Punjab National Bank, Indian Railway Catering & Tourism Corp (IRCTC) and Vodafone Idea.

A short build-up was seen in LTIMindtree, Persistent Systems and Coforge, while a long build-up was seen in Adani Enterprises, Shriram Transport Finance Corporation and Tata Power.

Bank of Baroda, Britannia Industries, L&T Finance Holdings, Ramky Infrastructure, South Indian Bank, Jammu & Kashmir Bank, Aditya Birla Capital, Jyothy Labs, CG Power and Industrial Solutions were among the stocks that touched their 52-week high on the BSE.

Also Read - World Bank revises upwards India's GDP growth forecast to 6.9% for FY23

Outlook for December 7

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

The bulls yet again managed to defend the key support at 18,600. The index has reached near the lower end of the rising channel on the hourly as well as the daily chart. There is a high probability of the index starting the next leg on the upside.

Initial resistance is at 18,700-18,730. Overall, the Nifty is expected to surpass the recent high of 18,888 and target 19,000 in the short term. The stance will reverse if the index closes below 18,500.

Ajit Mishra, VP-Technical Research, Religare Broking

Markets are digesting the recent gains and may take a few more sessions to resume the uptrend. Traders should focus on managing positions and gradually add quality names from across sectors.

A decline in the auto and IT majors is a good opportunity to accumulate, while pharma is not showing signs of a reversal yet.

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities

Weak sentiment prevailed through the session as investors offloaded shares in rate-sensitive sectors such as banking, automobile and realty on the eve of RBI's credit policy announcement.

If the rate hike is above the street expectations, investors may press the panic button, which could accelerate the selling pressure.

The currency market, too, witnessed hectic activity as the rupee breached the 82 mark, fuelling concerns of overseas investors cutting their positions.

The market is trading near the 10-day simple moving average, indicating a strong possibility of a trend reversal in the near future.

For traders, 18,700 would be the key level to watch out, above which a fresh uptrend till 18,800-18,850 is possible. A fresh round of selling is possible on dismissal of 18,600, below which the index can slide to 18,500-18,480.

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