Taking Stock | Market ends lower amid volatility; power, metal, PSU banks take a beating

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Indian benchmark indices started yet another week on a negative note and ended lower on May 9 amid widespread selling, a stronger dollar, concerns over surging inflation and the prospect of aggressive monetary tightening.

The Sensex, which sank to the day’s low of 53,918.02, closed at 54,470.67, down 364.91 points or 0.67 percent. The Nifty slipped to 16,142.10 before closing at 16,301.90, down 109.40 points or 0.67 percent.

“The market continued its downward rally amid lingering concerns over the weakening rupee, global interest rate hikes and tightening lockdowns in China,” said Vinod Nair, Head of Research at Geojit Financial Services.

“The relentless rise in the US dollar index owing to interest rate hikes and rising US treasury yield hammered investor’s risk appetite.”

A strong US jobs data indicated possibilities of faster rate hikes, forcing investors to opt for safe-haven assets, he said.

Reliance Industries, Hero MotoCorp, Nestle India, IndusInd Bank and Tata Steel were among the top Nifty losers, while gainers were Power Grid Corporation, HCL Technologies, Bajaj Auto, Infosys and Divi’s Labs.

Among sectors, Nifty metal, energy and PSU Bank fell 2 percent each, while the FMCG index dragged 1.4 percent.

Stocks and sectors

The BSE oil & gas, metal, FMCG, power and realty indices fell 1-2 percent, while IT index recovered from lows and ended on flat note.

Broader indices underperformed the benchmarks, with BSE midcap and smallcap indices shedding nearly 2 percent each.

A long build-up was seen in Indus Towers, Dalmia Bharat and Exide Industries, while a short build-up was seen in Hindustan Copper, Canara Bank and Tata Power.

More than 100 stocks, including Power Grid Corporation, Gallant Ispat and Coromandel International, touched their 52-week high on the BSE.

Among individual stocks, a volume spike of more than 100 percent was seen in Hindustan Copper, Power Grid and UPL.

Outlook for May 10

Manish Shah, Independent Technical Analyst

The Nifty closed with a green candle as the market recovered from the lows. The entire decline from 18,100 is in three “legs” classic AB=CD pattern.

The pattern in play is a Gartley 22 XABCD pattern. Gartley 22 is a harmonic pattern and suggests temporary trend exhaustion. The typical target for Gartley 22 is 38.2 retracement from the high. This gives us a minimum target of 16,900, which can extend to 17,400.

The Nifty formed a bullish harmonic pattern, which points to a quick recovery. The index is in a major support zone and stabilising there. It needs to trade above 16,490 to establish a short-term bottom and propel itself to higher levels.

Support is at 16,100 and a slide below it can take the Nifty to 15,700. The index is in an extremely oversold state and there is a high probability that the markets will reverse sharply from here. Avoid being heavily on the short side of the market.

Ajit Mishra, VP-Research, Religare Broking Ltd

Markets started the week on a feeble note and lost over half a percent in continuation of the prevailing corrective phase.

Meanwhile, buying in select sectors such as IT, pharma and financials supported the benchmark to cap the downside, while media, energy and PSU banks remained under pressure.

We’re not seeing any respite in the global markets, especially the US, and we’re largely reflecting the same trend at our end too. Besides, mixed Q4 earnings are adding to the negativity.

We reiterate our view to focus on shorting opportunities on the rise until we see some signs of reversal. On the index front, support is intact at 16,000 in Nifty and the 16,550-16,650 zone will act as an immediate hurdle.

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

There seems to be no respite for the markets from the bear hug, as weak Asian gauges and a fall in European indices dampened the investors’ sentiment.

After the results, Reliance Industries has taken a hit, which dragged the overall markets. Both external and internal factors are in the works for some time, which is putting pressure on the markets to come out of the weak sentiment.

On intraday charts, the Nifty showed some recovery from the day’s low. The larger texture of the market is still negative but if the index sustains above 16200, a pullback is likely to continue to 16,450-16,550.

Below 16,200, a fresh round of selling can take the index to 16,140-16,100.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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