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Sensex closed flat at 49,751
Sensex closed flat at 49,751

Sensex attempt to rebound fails, ends 570 points off day's highs. Midcaps shine

  • Broader markets outperformed as both midcap and smallcap indices gained 1.1% and 0.8% respectively.

Indian markets today snapped a five-session losing streak but ended significantly off day's highs. Gains in Reliance Industries and metal stocks were offset by a selloff in financial stocks. The NSE Nifty 50 index ended 0.22% higher at 14,707 while the S&P BSE Sensex closed flat at 49,751 after rising as much as 580 points at day's high.

After rising sharply in the first two weeks of February, Indian markets have come under strong profit-taking over last few sessions. Reliance Industries was the top boost to the Nifty 50, closing up 0.8% after the conglomerate said it expected to hive off its oil-to-chemicals business in the September quarter.

Among major sectoral indexes, the Nifty metal index advanced the most, closing up nearly 4% amid a rally in copper prices fuelled by hopes of a recovery in demand. Lenders Kotak Mahindra Bank and HDFC Bank were the biggest drags on the Nifty 50, falling 3.9% and 1.2%, respectively.

Meanwhile, the broader markets outperformed as both midcap and smallcap gained 1.1% and 0.8% respectively.

Here is what analysts said on today's market performance:

Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel Broking

"Our market rebounded sharply in the first half today; because the prices were a bit oversold which was then supported by the global recovery. However, it failed to sustain at higher levels as we saw individual pockets once again started feeling the heat. If we meticulously observe today’s high, it precisely coincided with the ’20-day EMA’ and hence, acted as a sturdy wall. Going ahead, till the time Nifty doesn’t go beyond 14900-15000, the short term momentum is likely to be on the downside. Hence, traders are continuously advised to use intraday recoveries to lighten up longs. The immediate resistance zone remains at 14775 – 14850; whereas 14665 followed by 14635 are to be seen as key supports. The way Nifty is shaped up, we will not be surprised to see Nifty sliding below these supports soon to test 14570 – 14470 levels."

Ajit Mishra, VP - Research, Religare Broking Ltd

"Today’s pause should be seen as a breather after five days of decline. Going ahead, global cues and the COVID-19 situation in India would dictate the trend. We advise limiting leveraged positions and wait for further clarity."

Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities

“Markets logged small gains after a sharp decline in last five sessions. Most of the time such type of formation works as a continuation and on Wednesday, if the market breaks the 14630/49600 level, the Nifty/Sensex could fall further on the support of 14530/49300 levels. However, a 50% retracement shown by the Nifty/Sensex after the announcement of the Union Budget could be a reversal for the market. In short, there should be a buying strategy if the Nifty/Sensex falls to the 14530/14500 levels. However, if the Nifty closes below the 14500 level, it would indicate further weakness. On the upside, 14850/50350 and 14950/50750 levels would be the major obstacles. While the metals sector performed well to date, bank stocks failed to perform due to exceptional strength in long-term bond yields."

Deepak Jasani, Head of Retail Research, HDFC Securities

"In the U.S., attention will be focused on Federal Reserve Chairman Jerome Powell on Tuesday as he delivers his semi-annual testimony on the economy before the Senate Banking Committee. His comments on rates and inflation could determine the market direction for the week. Nifty halted the 5-day losing streak but the recovery or bounce was feeble. This raises doubts about sustainability of this bounce. However positive advance decline ratio raises hope for the broader markets."

Vinod Nair, Head of Research at Geojit Financial Services.

"Domestic market got back on its feet during the morning trade supported by strong Asian market while negative waves from European peers outweighed the gains by the end of the day. The expectation of strong global recovery as prompted by rising international commodity prices helped the market but was tempered due to elevated bond yield and virus cases. Consequently, volatility has increased in the domestic front, but broad markets continue to be attracted with themes like mid and small caps, cyclicals, energy, PSUs, Metals and Industries."

Manish Hathiramani, Proprietary Index Trader and Technical Analyst, Deen Dayal Investments

"The Nifty gave up most of its gains as the day progressed. The weakness continues to remain in the short term and we can expect the index to slide further to levels closer to 14500. Any rally up can be used to short this market for lower targets. The upside is capped at 15000 -15100 and until we do not get past that comfortably, the markets will remain bearish."

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