Sensex fell over 100 points to fall below 72,350 mark while Nifty 50 lost over 50 points to drop below 22,550 level on Thursday, as seen at around 10 am. Broader markets also slipped into the red, with Nifty Midcap 100 and Nifty Smallcap 100 indices falling up to 0.7%.
UltraTech Cement, Eternal and M&M shares dropped more than 2% to lead losses on Sensex, while Kotak Mahindra Bank shares jumped nearly 4% following the appointment of new CEO. Infosys, HCL Tech, TCS, HDFC Bank and Axis Bank shares meanwhile gained around 1% each.
Nifty Auto plunged more than 2% to be the top loser among the sectors. Bucking the trend, Nifty Private Bank and Nifty IT gained nearly 1% each. The overall market breadth continued to favour the bears, with NSE seeing 2,148 declines against 916 advances, while 121 stocks remained unchanged.
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What lies ahead for Dalal Street?
The sustained FII selling became intense during the last two trading days when the FIIs sold equity for a total of Rs 20,128 crore, VK Vijayakumar, Chief Investment Strategist at Geojit Investments pointed out. With the US 10-year bond yield rising further to 5.3%, FIIs may continue to sell, he warned.
An apparent contradiction in the FII activity is that even while selling through the exchanges, they have been consistently investing through the primary market and also buying expensive mid-and small-caps, the analyst said. While FIIs sold equity for Rs 45,536 crore through the exchanges in September, they invested Rs 9,676 crore through the primary market. The strength in the US bond yields and expectations of further weakness in the Indian large-caps might be the reason for this apparently inconsistent FII activity, he said.”This appears to be a short-term phase in the market. Things will turnaround when crude declines. And there is hope on that front with the Brent crude declining below $98. Investors can use this weak phase in the market to accumulate high-quality stocks, particularly large-caps in growth segments where the risk-reward ratio is favourable for investment,” according to the analyst.
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Technical view on Nifty
The bias is neutral and the undertone stays subdued while the Nifty trades below 22,800, said Hemang Gor, Senior Research Analyst Derivatives and Technical Research, Axis Direct. He sees the benchmark index finding immediate support at 22,500, with a break exposing 22,400.
A durable easing in crude or Treasury yields could help the index reclaim 22,800 and extend recovery toward 23,000, the technical analyst added.
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