Benchmark equity indices ended a highly volatile trading session in the red on Wednesday. Sensex and Nifty opened in the green tracking positive global cues and continued to surge to record highs. The Nifty crossed the 15,800 level for the first time ever intraday however it could not hold on to it as selling pressure in the second half of trade pulled markets lower.
The S&P BSE Sensex ended at 51,942, down 333 points, or 0.64%, while the Nifty50 closed the session at 15,635-mark, down 105 points, or 0.67%.
All the sectoral indices ended in the red with Nifty PSU Bank, Nifty Auto, Nifty Metal and Nifty Media falling the most.
On the Nifty50 index, Tata Motors, Adani Ports, Shree Cements, L&T and Reliance Industries led the losses, while PowerGrid Corporation, SBI Life, NTPC, Titan and Coal India were the top gainers.
Among other stocks, Petronet LNG fell 8% after lower-than-expected Q4 earnings. GAIL closed 3% lower as revenue & EBITDA came in lower than estimates.
The key question now is will the Nifty get past the key resistance level of 15,800 or will it slip further?
Markets traded volatile and settled with a cut of over half a percent. We’re seeing profit-taking and it’s healthy however volatility remains high during such a corrective phase which easily unsettles the participants. We thus advise keeping extra caution in managing overnight risk and preferring low beta counters over others. On the benchmark front, the previous high zone around 15,400 would act as critical support in case of further correction while 15,800 will continue to act as an immediate hurdle.
Wednesday’s decline seems to have dampened the effort of bulls to sustain the highs. The formation of the long bear candle at the new highs open chances of a reversal pattern. But, follow-through weakness in the subsequent session is expected to confirm the reversal and that could open more weakness for the short term. Crucial supports to be watched at 15,560 and a decisive move below this area is expected to drag the market to lower 15,400 levels.
Nifty declined sharply for the day as Nifty was not able to hold on to the gains seen in last couple of weeks. Nifty saw a long red candle and the way Nifty has declined it bears to reason that one must take precautions to at least reduce some open trades. Nifty saw a long red candle that was wider than several preceding several candles which prompts us to believe that sellers were in control of the stock.
The price action in Nifty suggests 16,000-15,550 is a crucial support for the index. The underlying current is bullish and notwithstanding a couple of days of decline, the index should move higher. The oscillators are in a buy mode as MACD is above a signal line. RSI continues to trade above 60.
Markets do not move in a straight line but they oscillate. Nifty may see a decline towards 15,200 and stabilize at lower levels. The undercurrent is strong and Nifty should bounce once selling is done. On the upside, Nifty needs to break above 15,770 for the rally to see higher levels
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