Sensex, Nifty end flat amid volatility, IT stocks rally; here’s what weighed on Indian stock market

BSE Sensex and Nifty 50 settled lower for the third straight trading session on Tuesday on the back of rising Covid-19 infection cases in various parts of the country and new restrictions. BSE Sensex ended 31 points or 0.06 per cent down at 50,363.96, while the broader Nifty 50 index settled at 14,910, down 19.05 points or 0.13 per cent. Index heavyweights such as HDFC Bank, ICICI Bank, Housing Development Finance Corporation (HDFC), Larsen & Toubro and Reliance Industries Ltd (RIL) contributed the most to the indices loss. During intraday, BSE Sensex hit a high of 50,858 and a low of 50,289. While NSE’s Nifty touched a day’s high of 15,051.60 and a low of 14,890.65. India VIX, the volatility index, eased nearly 5 per cent to close at 20.19 levels. Meanwhile, Finance Minister Nirmala Sitharaman announced that the Union Cabinet has cleared the setting up the Development Finance Institution (DFI). Sitharaman added that the initial capital infusion will stand at Rs 20,000 crore.

Rohit Singre, Senior Technical Analyst at LKP Securities

The index opened a day with gains but not able to sustain on the positive zone and closed the day at 14920 with mild loss & formed a bearish candle on the daily chart. On the higher side, 15000-15050 zone is a strong hurdle we have been witnessing selling pressures from mentioned levels so for the fresh upside index need to sustain above 15050 zone, immediate support is coming near 14800-14750 zone any break below said levels can increase selling pressure.

Vinod Nair, Head of Research at Geojit Financial Services

Indian market is impacted due to rising crude prices and selling by both FIIs & DIIs. We can expect FII selling to calm down post the Fed policy meet and ease in US bond yield, as an accommodative outlook is expected. The domestic sentiment is suppressed by rising covid-19 cases increasing the risk of a second wave and fall in macro data like production & rise in inflation.

Ashis Biswas, Head of Technical Research at CapitalVia Global Research Limited

The market failed to show resilience to stay above the Nifty 50 index level of 15,000. While it is subject to further price action evolution, the technical factors are aligned to support a lackluster market movement going forward. Any corrective wave down should find support around 14750. As such, the traders are advised to refrain from building a fresh buying position until we witness a correction till 14750 levels. The volatility is observed to expand in today’s trading session indicating profit booking and distribution of stocks at a higher market level.

Binod Modi, Head Strategy at Reliance Securities

Domestic equities gave up initial gains and traded flat towards the final hours of the day despite favourable cues from global equities. Financials once again dragged the markets. Notably, IT stocks were in focus today mainly on expectations of sustained earnings momentum in 4QFY21E and benefits from a possible fall in INR. The volatility index softened sharply for the second consecutive day. In our view, increasing concerns with regards to resurgence of Covid-19 cases in various parts of the country and resulted restrictions could be a near term risk for domestic markets. Additionally, volatile bond markets and soaring inflation will continue to weigh on investors’ sentiments. However, we continue to believe that the recent rise in bond yield discounts a faster recovery in economic growth and this is unlikely to move northward beyond a point. We believe that any meaningful correction in the market should only be creating an opportunity for bargain trading as India continues to offer superior growth prospects