The benchmark stock market indices witnessed volatility and ended lower on January 21. At day's close, Sensex was down 427.44 points or 0.72 percent at 59,037.18. The broader Nifty shed 139.80 points or 0.79 percent at 17617.20.
Bajaj Finserv was down above 4 percent, followed by Tech Mahindra, and Tata Steel. Paytm parent One97 Communications' stock hit an all-time low of Rs 961.5. Extending losses to a sixth straight session , SBI Card stock hit a 52-week low on Friday.
Deepak Jasani, Head of Retail Research, HDFC Securities, said, Nifty ended the week with the worst losses in about two months. It fell 3.5 perent over the week. Advance decline ratio fell sharply to much under 1:1. This suggest that the nervousness has spread to the broader markets. The US Fed meet next week may not allow a sharp bounce early next week. 17,288-17376 could be the next support while 17,747-17,798 could be the next resistance for the Nifty, said Jasani.
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd, said Indian equity markets corrected this week in line with the global market selloff. The rise in US bond yields and the expected tightening of monetary policy by Central Banks is weighing on investor sentiments. The 10 year US treasury yield moved higher this week, hitting 2-year high. BSE 30 and NSE 50 index corrected by 3 percent this week. Despite the weak market correction, the BSE small-cap index hit a new high this week and outperformed the large indices.
Shibani Kurian, Senior EVP & Head- Equity Research, Kotak Mahindra Asset Management Company, said, Equity markets in India witnessed volatility during the week ended January 21, 2022. Global equity markets were volatile as well on the back of expectations of faster interest rate hikes by the US Federal Reserve, rise in US bond yields, higher crude oil prices and concerns over rising inflation. Globally, Inflation concerns are getting far more tangible as seen in latest US CPI print of 7 percent YoY. CPI inflation in India stood at 5.59 percent in December 2021 (4.91 percent in November 21) but still remains within the tolerance band of RBI which stands 4 percent (+/-2 percent).
In terms of flows, foreign institutional investors remained sellers of domestic equities, a trend now seen over the past few months. On the other hand, domestic Institutional Investors remained net buyers supported by the strong inflow from retail participants into mutual funds.
Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities Ltd, said, "It is the global phenomenon that is driving the sentiment in local stocks as investors are concerned that a rate hike by the US Fed could further precipitate the already weak sentiment. While rising inflation is already giving jitters to the market, to make matters worse oil prices too have been on an upward march in recent sessions which is putting investors on the backfoot. On weekly charts, the Nifty has formed a long bearish bar reversal candle which indicates short term weakness going ahead. Also, the index closing below the 20 day SMA is broadly negative. For the bulls the 50 day SMA or 17500 would act as a sacrosanct support level. Above the same, a pullback rally could be seen which could take the index up to 17,775 and may rise further to 17900-17950 levels on further upside. On the flip side, a close below 50 day SMA could trigger further weakness up to 17,400-17300."
Mohit Nigam, Head - PMS, Hem Securities, said Benchmark Indices traded in the red after a gap-down start on Friday amid weak global cues and volatility and ended their day losses as Nifty50 closed 0.75 percent lower and Sensex closed at 59,037 i.e. 0.72 percentlower. Broader indices the BSE Mid cap index and Small cap index were trading in red down by 1 percent or more. Constant selling by FIIs weighted down on the markets. As per provisional data available on NSE, Foreign institutional investors (FIIs) sold shares worth Rs 4,679.84 crore on January 20. Sentiments were impacted as data showed foreign portfolio investors have sold equities worth Rs 4,197 crore so far this month. Seeing firm demand in the Spot market, Gold prices rose Rs 30 to Rs 48,410 per 10 gram in the futures trade."
Palak Kothari, Research Associate, Choice Broking said, "The index continued its downside movement for the fifth consecutive day. On the technical front, the index has formed bearish engulfing on a weekly time frame which points to weakness in the counter. Furthermore, the index has given closing below 38.2 percent RL of a previous up rally which suggests further downside can be seen. Moreover, the index has been trading below 21&50-HMA with a negative crossover as well as a momentum indicator MACD & STOCHASTIC are trading with a negative crossover on the daily time-frame which suggests weakness in the counter. At present, the Index has support at 17,450 levels, breaching below it can show 17350-17300 levels while resistance comes at 17,800 levels. On the other hand, Bank Nifty has support at 37,000 levels while resistance at 38,000 levels."
Prashant Tapse, Vice President (Research) at Mehta Equities Ltd said a furious bout of selling was seen and the Nifty collapsed again in today’s trade as many momentum stocks mostly crumbled and ended with sharp losses. "The street fears that the US Federal Reserve will have to accelerate further its tightening pace. Also, breaking the back of Dalal Street were the rising oil prices which have jumped to 7-Year Highs amidst supply concerns and drone strikes. Nifty’s daily charts are still painting a bearish picture; downside risk seen at 17,371 mark and then aggressive targets at 17,171."
