Markets end weak for second straight session; RIL, TCS, Bajaj Auto lead fall

The Benchmark Indices fell intra-day over half percent, tracking the decline in global peers amid concerns that the spread of COVID variants could disrupt economic recovery but later recovered partially from the intra-day low mainly led by Metal and Realty stocks. Central Depository Services (CDSL), has become the first depository to cross more than four crore active Demat accounts in India. Union Cabinet approved India COVID-19 Emergency Response & Health System Preparedness Package: Phase-II amounting to $3.10 billion for FY22.

Mohit Nigam, Head-PMS, Hem Securities said, "Expect positive for the pharma sector as this scheme will focus on boosting the health system preparedness for immediate responsiveness for early prevention, detection, and management, with the focus on health infrastructure development including for pediatric care. It is a buy-on-dips kind of market so at the lower levels buying was seen that gave support to the market. Immediate support and resistance for Nifty 50 are 15,600 and 15,800 respectively," he said.

On the back of global clues and SGX Nifty, the index opened on a gap-down note and made an intraday low at 15,632.75 levels but managed to close at 15,689.80 levels with a loss of 38.10 points. While, bank Nifty closed at 35,071.95 levels with a loss of 202.15 points. The Indian VIX closed at 12.95 down by 4.57 percent.

On the sectoral front, the Nifty Metal inched up by 2 percent while the Nifty FMCG and Energy ended in red. Stocks like Tata Steel, Bajaj Finserv, Adani Ports, and Bharti Airtel were top gainers while Bajaj Auto, TCS, HDFC Bank, were top losers in the Nifty.

Sumeet Bagadia, Executive Director, Choice Broking said, "Technically, the index has taken support from the horizontal line and given closing above the same one, which points out bounce-back movement can be expected. Furthermore, the Index has formed a Doji Candlestick pattern which points out indecision between bulls and bears. On an hourly chart, the Index has taken support from 200-HMA as well as RSI has bounced from oversold zone, which suggest upside movement in coming days. At present, the nifty seems to have resistance at 15860 level while immediate support comes at 15,600 levels," he said.

The short term trend of Nifty continues to be negative. But the formation of doji and double bottom could hint at the possibility of upside bounce in the market in the coming sessions, said Nagaraj Shetti, Technical Research Analyst, HDFC Securities. "A session with firm positive close in subsequent session is likely to confirm bullish reversal and that could open upside bounce in the market. All bets are going to off on a decisive decline below the support of 15630 levels. Intraday resistance to be watched at 15780 levels," he said.

Weekly roundup

Looking at the weekly movements of equities, Shrikant Chouhan, Executive Vice President, Equity Technical Research, Kotak Securities Ltd, said domestic equity were mixed in this week. Domestic markets eased amid contraction in June services PMI, churn in central government ministries, monsoon spread, new COVID cases and key global events.

While BSE Sensex and Nifty 50 declined by 0.2 percent and 0.3 percent respectively, BSE Midcap and BSE Smallcap index gained 1.1 percent and 1.0 percent, respectively during the week. Sectoral performance was also mixed. During the week, BSE Realty index gained 5.4 percent and BSE healthcare index was up by 2 percent. On the other hand, BSE Auto witnessed a decline of 3% in the week. JLR (Tata Motors subsidiary) warned about impact of chip shortage on sales volume and cash flow in 1HFY21. BSE IT and BSE Oil & Gas declined 1.5 percent and 1.4 percent, respectively.

S&P 500 and Nasdaq witnessed record highs during the week as minutes from last Federal Reserve meeting signaled minimal changes to the central bank's view on inflation and asset purchase. However, the US indices slipped post recording highs led by sharp reversal in bond markets amid possible concern about the pace of global recovery. U.S. 10 year treasury yields fell to a low 1.25 percent - lowest since February 2021. Chinese technology stocks fell during the week amid China’s regulatory crackdown. During the week, crude oil touched a three year as OPEC plus nations failed to reach an output deal.

FPIs have been net seller in Indian equities in July 2021 till date. All key emerging markets and Asian markets have seen FPI outflows this month to date. We expect FPI flows to India to remain vulnerable to US Fed monetary policy and rising crude oil prices. Markets going ahead will keep a watch on inflation, oil prices, bond yields and spread of COVID Delta variant.

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