Market wrap: Sensex, Nifty extend fall into second consecutive session; inflation data, Fed interest-rate decision eyed
Sensex closed 223 points, or 0.35 per cent, lower at 62,625.63 while the Nifty ended at 18,563.40, down 71 points, or 0.38 per cent.
PremiumDomestic stock market benchmarks the Sensex and the Nifty ended lower for the second consecutive session on Friday (June 9) amid weak global cues with investors shifting focus to the next week’s inflation data and the US Federal Reserve interest-rate decision.
While there are strong expectations that the Fed will skip a rate hike this month, there is much uncertainty regarding further policy tightening. A surprise interest rate hike in Canada signals that the era of high-interest rates is far from over.
"The Bank of Canada on Wednesday (June 7) hiked its overnight rate to a 22-year high of 4.75 per cent, and markets and analysts immediately forecast yet another increase next month to ratchet down an overheating economy and stubbornly high inflation," reported Reuters.
The Reserve Bank of India (RBI) on June 8 kept the repo rates unchanged at 6.5 per cent and maintained the 'withdrawal of accommodation' stance. However, RBI Governor Shaktikanta Das emphasised that the war against inflation continues and the central bank remains focused to bring inflation below 4 per cent.
Sticky inflation and the resultant monetary tightening remain key concerns for the market as both hit economic growth by impacting consumer spending, reducing business investment and hitting the profitability of companies.
Sensex opened 38 points lower at 62,810.68 against the previous close of 62,848.64 and touched its intraday high and low of 62,992.16 and 62,594.74 respectively. The 30-share index finally closed 223 points, or 0.35 per cent, lower at 62,625.63 while the Nifty ended at 18,563.40, down 71 points, or 0.38 per cent. Mid and smallcap indices ended flat.
Even though the benchmarks ended lower and market sentiment appeared feeble, as many as 170 stocks, including Axis Bank, Britannia Industries, IndiGo, IndusInd Bank, Indian Oil Corporation, NTPC, Trent and UltraTech Cement, hit their 52-week highs in intraday trade on BSE.
Meanwhile, Crude oil prices exhibited slight volatility due to a balancing act between concerns over oil demand growth and the implementation of output cuts by Saudi Arabia. The rupee jumped 11 paise to end at 82.46 per dollar.
Top Nifty Gainers and Losers
As many as 33 stocks ended in the red in the Nifty50 index, with Hero MotoCorp (down 2.19 per cent), HDFC Life (down 2 per cent) and Divi's Labs (down 2 per cent) as the top losers.
On the other hand, IndusInd Bank (up 2.03 per cent), Axis Bank (up 1.30 per cent) and Power Grid (up 1.06 per cent) were the top gainers among the 17 stocks that ended higher in the Nifty index.
Top gainers, losers today: Tata Steel, IndusInd, SBI, Axis Bank, IEX; check full list here
Most Sectoral Indices Fall
Barring Nifty Private Bank, which logged a minor gain of 0.19 per cent, and the Realty index, which ended flat, all sectoral indices ended in the red today.
Nifty PSU Bank (down 1.25 per cent) lost the most, followed by Nifty FMCG (down 0.94 per cent), IT (down 0.89 per cent), Media (down 0.83 per cent) and Consumer Durables (down 0.71 per cent).
Experts' Views on Markets
"The domestic market witnessed extended selling pressure as investors eagerly awaited the domestic inflation data due on Monday as the RBI refrained from an aggressive cut in their inflation forecast. The market is hopeful that the CPI inflation for May will further moderate from its current level of 4.7 per cent. In addition to the domestic factors, global cues also failed to provide support, as the US reported high unemployment claims ahead of the release of the inflation figures and the Fed meeting," said Vinod Nair, Head of Research at Geojit Financial Services.
"Indications are pointing towards a further slide in the Nifty index, however, the downside also seems capped citing support at 18,400 levels. We recommend focusing more on position management during the corrective phase and preferring sectors/stocks that are showing relatively higher strength," said Ajit Mishra, SVP - Technical Research, Religare Broking.
Technical Views on Markets
Rahul Ghose, Founder & CEO of Hedged, an algorithm-powered advisory platform observed even though the Nifty index fell today, the monthly expiry contract of the 18,600 put option did not lose any open interest. This indicates that traders are confident currently of a close-by bottom in this small profit booking phase.
"The floor for the Nifty is at 18,400 and the floor for Bank Nifty is at 43,350, till either is taken out, the trend is up and intact. Traders on Monday should watch out for the magnitude of call writing that happens at the 44,000 call level with respect to Bank Nifty to determine whether the near-term uptrend is halted for the forthcoming week," said Ghose.
Amol Athawale, VP-Technical Research Analyst at Kotak Securities said on weekly charts, the Nifty formed a Hammer candlestick formation, which indicates further weakness from the current levels.
"As long as the index is trading below 18,675, the weak sentiment is likely to continue and below the same, it could slip to 20-day SMA (simple moving average) or 18,450. The further downside may also continue which could drag the index to 18,350," said Athawale.
"A fresh uptrend rally is possible only after the dismissal of 18,675 and above the same, the market could rally to 18,800-18,900. Meanwhile, Bank Nifty is witnessing a non-directional activity and perhaps traders are waiting for either side breakout. For the bulls now, 44,000 would be the immediate resistance zone while 43,800 could act as a key support level. Above 44,000, the Bank Nifty could rally to 44,500 whereas, below 43,800, the selling pressure is likely to accelerate and may retest the level of 43,500-43,300," Athawale said.
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Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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