Markets extend fall for 3rd straight session as key indices shed 1%; IT, realty stocks face hammering

The stock markets closed lower again on June 7 (Tuesday). Nifty continued its downside moment for third day, after gap-down opening index traded lower and made an intraday low at 16347.35 level. However, Bank nifty closed the session at 34,996 level with a loss of 314.20 points. Out of Nifty50, 38 stocks ended in red which suggest broad-based selling.

The benchmark indices closed in the red with Sensex down 567.98 points or 1.02 percent at 55107.34. The broader Nifty fell 153.20 points or 0.92 percent at 16,416.30. About 1261 shares have advanced, 1954 shares declined, and 126 shares are unchanged.

Among the sectors, FMCG, IT and realty ended down by more than one percent each while buying was seen in the Auto & Energy Sector. The midcap and smallcap indices shed over half a percent each.

Despite the fall, stocks like Coal India, Maruti, ONGC, NTPC and Bharti Airtel were the top gainers, Titan, UPL, Dr Reddy and Britannia were the prima laggards.

Palak Kothari, Research Associate, Choice Broking said, On technical front, the Nifty has formed Bearish candle and given closing below horizontal support line on daily time frame which suggest downside movement in the counter. From the last three trading sessions, nifty has been trading with a higher low and lower low formation which points out weakness in the trend. Nifty has given closing below 200-Hourly Moving Average which indicates sustain below the same can show downside moment in the counter.

The momentum indicators Stochastic was trading with a negative crossover as well as reversed from the overbought zone on a daily chart which suggest a southward journey in the counter. The Nifty may find support around 16,300 levels, breaching below the same can show 16,200-16,100 levels while on the upside 16,500 may act as an immediate hurdle. On the other hand, Bank nifty has support at 34,500 levels while resistance at 35,500 levels. Overall, Nifty is showing weakness on a chart, breaching below 16,350 level can create more panic and index can test 16,100 -16,200 level, added Kothari.

Markets in wait-watch mode

Markets made a gap down opening and tried to recover in the noon session but were not able to sustain due to global cues and closed in red, said Mohit Nigam, Head - PMS, Hem Securities. Among sectors Selling was visible in Reality, Capital goods, IT whereas Nifty oil and gas, power sector closed in green. Indian markets are reacting to the outcome of the three-day Monetary Policy Committee meeting that will be released by the RBI tomorrow. Markets are expecting 40-50 bps hike in the repo rate to counter rising inflation worries. On the technical front, the key resistance levels for Nifty50 are 16,600 and on the downside 16350 can act as strong support. Key resistance and support levels for Bank Nifty are 35,500 and 34,700 respectively, Nigam added.

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd said, Investors are in a wait-and-watch mood ahead of the RBI's credit policy announcement, although several economists believe the MPC will hike rates further to tame inflation. The market has simply borne the brunt of unabated FII selling, which continues to desert Indian equities amid weakening rupee and strengthening dollar.

Technically, the Nifty broke the important support level of 16,450 and closed below the same which is largely negative. In addition, the index has also formed a bearish candle indicating short-term weakness. For traders, as long as the index is trading below 16,500 the short term texture remains weak, below which the correction wave is likely to continue till 16300. Any further correction could drag the index up to 16,225. On the other hand, above 16,500, there are chances the index could hit 16,600-16,650, Chouhan said.

Prashanth Tapse, Vice President (Research), Mehta Equities Ltd said, Benchmark indices ended in red for the third straight session on intense selling pressure amid expectations of aggressive global central banks and also the hawkish RBI backdrop. Also, US dollar logging modest strength along with bond yields above 3 percent were seen denting sentiments. Technically speaking, the downside risk for Nifty is seen at 16,121. Alternatively, if Nifty’s make-or-break support at 16,121 holds then expect bulls to re-group with aggressive targets seen at 16,897-17,250 zone with interweek perspective. Nifty’s 200- DMA is seen at 17,269 mark.

Global markets fall

World shares fell on Tuesday and bond yields remained supported as a surprise 50-basis-point rate increase in Australia raised concern over policy tightening ahead of US inflation data and a European Central Bank meeting this week. The Reserve Bank of Australia (RBA) raised rates by the most in 22 years and flagged more tightening to come as it battles to restrain surging inflation, driving a brief spike in the Aussie and hitting local shares.

The MSCI's benchmark for global stocks fell 0.3 percent to 650 points by 0843 GMT, weighed down by morning losses in Europe and earlier weakness across Asian markets. The pan-European STOXX 600 equity benchmark index fell 0.4 percent, while S&P 500 e-mini futures fell 0.4 percent.

Gold declines Rs 205, silver tumbles by Rs 964

Gold in the national capital on Tuesday declined by Rs 205 to Rs 50,733 per 10 grams, according to HDFC Securities. In the previous trade, the yellow metal finished at Rs 50,938 per 10 grams. Silver also dipped Rs 964 to Rs 61,555 per kg from Rs 62,519 per kg in the previous trade.

''Spot gold prices for 24 carat gold in Delhi fell by Rs 205 reflecting overnight decline in COMEX gold prices,'' said Tapan Patel, Senior Analyst (Commodities) at HDFC Securities.

In the international market, gold was trading higher at $1,844 per ounce while silver was marginally lower at $22.01 per ounce.

(With inputs from Reuters, Agencies)