Indian benchmarks indices saw profit booking for the second consecutive day on April 6 on the back of weak global cues as investors await the FOMC March meeting minutes, to be released tonight.
At close, the Sensex was down 566.09 points or 0.94 percent at 59,610.41, and the Nifty was down 149.70 points or 0.83 percent at 17,807.70.
At a conference on April 5, Federal Reserve Governor Lael Brainard said she expects methodical interest rate increases and rapid reductions to the Fed’s balance sheet to bring US monetary policy to a “more neutral position” later this year, with further tightening to follow as needed, reported Reuters.
“The main indices are muted due to drop in HDFC group stocks after the rally, and the subdued performance of IT sector in anticipation of weak results on a QoQ basis and weak global cues,” said Vinod Nair, Head of Research at Geojit Financial Services.
“The broad market has maintained its momentum due to the good performance of Mid & Small caps.”
“We can expect volatility in the near-term ahead of the RBI policy meeting which is expected to hold the rates but increase inflation forecast,” he added.
HDFC Bank, HDFC, HDFC Life, HCL Technologies and Tech Mahindra were among the top Nifty losers. Coal India, IOC, NTPC, Tata Steel and Power Grid Corp were the top gainers.
On the sectoral front, Nifty Bank and IT indices fell 1 percent each. On the other hand, PSU Bank and metal indices gained 1 percent each.
Also Read – Benchmark indices fall for the second straight day: Here are 4 factors dragging the market
Stocks and sectors
On the BSE, selling was seen in the auto, banking, IT, pharma and realty sectors, while oil and gas, power and metal indices gained 1 percent each.
The broader market outperformed the frontliners, with BSE midcap and smallcap indices ending with marginal gains.
A long build-up was seen in Indian Hotels, Tata Power and SAIL India, while a short build-up was seen in the IRCTC, Marico and Rain Industries.
On the BSE, over 150 stocks touched their 52-week high, including Tata Power, Welspun Corp, IDFC, Dwarikesh Sugar Industries and Bank of Baroda.
Among individual stocks, a volume spike of more than 200 percent was seen in Coal India, NALCO and Indian Hotels.
Outlook for April 7
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities:
Traders rushed to trim their position further in banking and IT stocks, thus pulling down key benchmark indices sharply. Weakness in other global markets and concerns that the hawkish US Fed is likely to hike interest rates along with caution ahead of the RBI’s policy meet prompted investors to turn risk averse.
The intraday texture of the market has turned weak and a fresh pullback rally is possible only after the 17900 breakout.
For traders, 17,900 would act as an immediate hurdle, and below the same, a weak formation is likely to continue till 17,700-17,650. However, above 17,900 the index could move up to 17,820-17,865.
The Nifty is having strong support between 17,650 and 17,700 and hence contra traders can take a long bet near 17,650 with strict support stop loss at 17,620.
Rupak De, Senior Technical Analyst at LKP Securities:
The benchmark index found resistance around the previous low before settling on a negative note. On the daily chart, the index has been moving within a rising channel where it has fallen to the lower band of the said channel.
Going forward, immediate recovery from the current level is expected. However, failure to hold above the lower band of the rising channel may trigger selling pressure in the market. On the lower end, support is visible at 17,750 below which the Nifty may drift down towards 17,450 over the short term.
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