Profit-taking in late trade wipes early gains as markets extend fall; realty, capital goods shares crumble

Midcap and smallcap indices also ended in the red

FPJ Web DeskUpdated: Monday, June 06, 2022, 05:39 PM IST
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The BSE Sensex plunged 359.33 points or 0.64 percent at 55,566.41 / Representative image | Photo credit: IANS

The stock market indices closed in the red after a volatile session. Indian benchmark indices made a gap-down opening and recovered in the noon session but were not able to sustain due to global cues and closed in red. Midcap and smallcap indices also ended in the red.

Among sectors, selling was visible in Reality, Capital goods, Media & Commodities whereas Nifty IT, Banks closed in green. In the opening session Indian markets are reacting to stronger Job data released by the USA and following the trend of US markets.

Sensex declined 93.91 points or 0.17 per cent at 55,675.32. The Nifty shed 18.50 points or 0.11 per cent at 16,565.80.

The index heavyweight Reliance Industries Limited closed 0.45 per cent down at Rs 2766.90. Only 9 out of the 30 stocks that are part of the benchmark Sensex closed in the positive.

Among top gainers were Tata Steel, IndusInd Bank and Mahindra & Mahindra. Among major laggards were Shree Cements, Asian Paints and BPCL.

Markets cautious ahead of credit policy announcement

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd, said, Basically, the market has been exercising caution ahead of the credit policy announcement this week, and hence investors trimmed their position in rate-sensitive sectors such as realty.

Technically, the Nifty found support near 16450 but failed to capitalise on it. The texture of the chart is indicating that a range bound activity is likely to continue in the near future. For day traders, 16500 would be the key support level to watch out, and above which the index could move up to 16,650-16,750. On the flip side, a fresh round of selling pressure is possible if the index trades below 16,500. Any further decline could see the index retest the level of 16,400-16,350, Chouhan said.

Prashanth Tapse, Vice President (Research), Mehta Equities Ltd, said, After a shaky start, Nifty mostly recouped morning losses but towards close again gave up ground to end slightly below the dotted lines. Most of the momentum stocks mostly traded with negative bias. The sentiments were depressed on backdrop of FIIs relentless selling. Denting sentiments were WTI crude oil prices trading near $119 a barrel after Saudi Arabia raised the official selling price of its flagship Arab light crude for Asia and northwest Europe.

"We suspect, Nifty will lack direction for next 2-trading sessions as the key driver of sentiment hinges on the RBI monetary policy outcome to trickle in on June 8. Technically speaking, after today’s consolidation, the downside risk on Nifty is seen at the 16371. Alternatively, if Nifty’s make-or-break support at 16371 holds then expect bulls to re-group with aggressive targets seen at 16897-17250 zone with interweek perspective," added Tapse.

Mohit Nigam, Head - P,MS, Hem Securities said, On the technical front, the key resistance levels for Nifty50 are 16,700 and on the downside 16,400 can act as strong support. Key resistance and support levels for Bank Nifty are 35,600 and 35,000 respectively.

Palak Kothari, Research Associate, Choice Broking said, due to the weak global cues and SGX, Nifty opened on a negative note and made an intraday low at 16,444.55 levels but in the second of the session it showed some bounce back from its low and closed the session at 16,569.55 level with a slight loss of 14.75 points. While Bank Nifty closed the session at 35310.20 level with a gain of 35 points. The Nifty has formed Hammer kind of candlestick pattern on daily time frame with the support of horizontal line which indicates strength for upcoming session. Nifty has been trading above 21-Daily Moving Average which indicate sustain above the same can show upside moment in the counter. However, daily chart index has faced a resistance from the level of 38.2 percent Fibonacci retrenchment of its previous up move and crossing above the same can show more upside rally.

The momentum indicators Stochastic was trading with a positive crossover on a daily chart which suggest upside journey in the counter. Coming to the OI Data, on the call side the highest OI witnessed was 17000 followed by 16800 strike prices while on the put side, the highest OI was at 16500 followed by 16,300 strike prices. The Nifty may find Strong support around 16,400 levels, while on the upside 16,750 may act as an immediate hurdle. On the other hand, Bank Nifty has support at 34,800 levels while resistance at 36000 levels.

Overall Market can show upside movement with the support of 16,400 levels, crossing above 16,750 level can show more upside rally, Kothari added.

European, Asian stocks up

European and Asian stocks rose on Monday after China relaxed some COVID-19 restrictions, calming the markets that have been unsettled by concerns over global central bank rate rises to tackle persistently high inflation, said HDFC Securities in a note.

Shanghai, Hong Kong stocks close at two-month highs

Shanghai and Hong Kong stocks closed at near two-month highs on Monday, as Beijing and Shanghai steadily return to normal life from China's biggest COVID-19 outbreak in two years, with sentiment boosted by measures to revive the country's economy.

The blue-chip CSI300 index rose 1.9 percent to 4,166.09, the highest level in seven weeks, while the Shanghai Composite Index gained 1.3 percent to 3,236.37, the highest since April 8. The Hang Seng index rose 2.7 percent to 21,653.90, the highest since April 8, while the China Enterprises Index gained 3.2 percent, to 7,499.97 points.

Rupee gains 2 paise to close at 77.64 against dollar

The rupee inched up 2 paise to close at 77.64 (provisional) against the US dollar on Monday, tracking a weak American currency in the overseas market. However, surging crude prices, unabated foreign capital outflows and subdued domestic equities capped the appreciation bias in the rupee, forex dealers said.

At the interbank forex market, the local unit opened slightly strong at 77.65 against the greenback and witnessed an intra-day high of 77.55 and a low of 77.67. It finally settled at 77.64, a rise of 2 paise over its previous close.

In the previous session, the rupee had settled at 77.66 against the greenback.

(With inputs from Reuters, Agencies)

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