The stock markets were in a sea of red at the close of trading session on January 20 as key indices crashed for the 3rd straight session. At close, the Sensex was down 634.20 points or 1.06 percent at 59,464.62. The broader Nifty was down 181.40 points or 1.01 percent at 17,757. About 1,593 shares have advanced, 1606 shares declined, and 64 shares are unchanged.
On the sectoral front, Nifty IT, PHARMA & FMCG were the top drags with 1.5 percent loss while METAL, REALTY performed well. Despite the fall some stocks like Power Grid, Bharti Airtel, Tata Consumer, and Grasim were breathing positively throughout the day while BAJAJFINSERV, BAJAJAUTO, DIVISLABS, INFOSYS plunged lower for the day.
Parth Nyati, Founder, Tradingo said, "Indian equity market is showing weakness for the third day in a row on the back of FIIs' selling, rising US bond yields, and concerns of inflation however this is just a correction that should be taken as a buying opportunity. If we look at the trend of last three years then the market starts to correct between 15-20th January and then it witnesses post-Vudget rally. A similar trend is visible for this year as well however I believe the market may witnesses recovery from here as we are near critical support levels.
"Nifty is trading near critical support of 17650 which was the previous breakout level while 17500 is another important support level. On the upside, 18000-18200 is an immediate resistance area; above this, we can expect a move towards an all-time high. The texture of bank nifty is strong and it may outperform from here and I believe we can expect strong earnings by banking names," Nyati said.
Mohit Nigam, Head - PMS, Hem Securities said "Benchmark indices are showing corrections for the third day in a row on the back of FIIs' selling, rising US bond yields, and concerns of surge in cases of the Omicron variant of the coronavirus and ended their session in red. On the technical front, the key resistance level for Nifty50 is 18,300 and on the downside 17,600 can act as strong support. Key resistance and support levels for Bank Nifty are 38,500 and 37,500 respectively."
Market sentiment turned further bearish as the specter of a rate hike by the US Fed continued to loom large, with the continuing flight of foreign capital from local bourses further dampening the sentiment, said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd. "For the traders, the 20 day SMA or 17,700 would be the sacrosanct support level. Trading above the same, a pullback rally could lift the index up to 17850-17900 levels. However, a fall below 17,700 could see the index retest the level of 17,650-17,600."
Sachin Gupta, AVP, Research, Choice Broking said, "Technically, the Nifty index has corrected almost 700 points in the last three sessions as the Bearish Engulfing pattern indicated the further correction on the daily chart. However, in the recent candle the index has tested immediate support at 38.2 percent RL of its previous rally. Moreover, the index has failed to sustain below 21 – days SMA that suggests further support around 17640 levels, below that the correction may extend till 17,400/17,300 levels. At present, the Index has support at 17,640/17,500 levels while resistance comes at 18,000 levels. On the other hand, Bank nifty has support at 37,500 levels while resistance at 38,400 levels."
Sahaj Agrawal, Head of Research- Derivatives at Kotak Securities said, "Nifty broke its momentum support levels of 17,900 and tested the 17,700 levels. For the short-term, selling pressure can push the index towards 17,350-17,450 mark. The medium term outlook remains intact as we don’t see any signs of trend reversal. On the higher side, expect 19,000-19,500 to be conquered going ahead. Value is seen in the Energy and NBFC space while other high beta sectors are expected to remain volatile."
