Taking Stock | Markets lose early morning steam, end lower for the second day

The equity market showed character on Wednesday (September 14) as it managed to stage a strong comeback from the morning lows. However, it could not sustain the morning gains today and soon came under pressure due to weak cues from Asian peers. Eventually, it settled in negative territory for the second successive day.

The BSE Sensex tanked 413 points or 0.7 percent to close at 59,934 while the Nifty took a hit of 126 points or 0.7 percent to end the weekly expiry day at 17,877.

The US markets set a positive tone for the day as they staged a strong comeback on Wednesday after witnessing their biggest single-day fall since the onset of the pandemic, the previous day. The Asian markets closed on a mixed note amid growing concerns about rising energy prices, global inflation and economic growth.

“Defying the positive trend of global markets, domestic indices shed its early gains, dragged by losses in IT and pharma sectors, while mid & small caps outperformed”, said Vinod Nair, Head of Research, Geojit Financial Services.

The global markets are jittery ahead of the US retail sales data while the Indian markets were also impacted by profit booking in banking stocks and the negative sentiments surrounding the IT sector. The IT stocks were again subject to beating today, amid the rising possibility of a cut in IT spending by the global giants in the wake of economic slowdown.

“Fears of a recession in the global economy exacerbated selling pressure in IT and pharma stocks”, added Nair.

Today, only the Nifty Auto and Metal indexes managed to stay above the line while all other sectors ended the day with losses. Nifty Auto gained the most - 0.7 percent while the metal index was marginally higher by 0.12 percent.

Like the past few days, the Nifty IT continued to remain a drag as it declined by 1.4 percent today. Pharma was down close to 1.3 percent while the Realty index shed close to 1 percent. The Banking stocks which have shown great resilience over the past few weeks, saw some profit booking and became part of the losers.

Maruti Suzuki, Eicher Motors, Adani Ports, Power Grid Corporation and NTPC were the top Nifty gainers, appreciating by 1.6 to 2.7 percent each.

Hindalco was the top loser on the Nifty as it slid 4 percent today. Infosys, Tech Mahindra, Cipla and Hero MotoCorp were the other losers of the day, losing between 2.1 to 2.9 percent each.

Stocks & sectors

The trend was same on the BSE as the BSE IT index shed more than 1.6 percent while BSE Teck was down 1.5 percent. BSE Realty index fell close to 1 percent while Pharma and Consumer Durable indexes were down 0.9 and 0.8 percent each.

Mixed trends were seen in broader indices with BSE Midcap and Smallcap outperforming the Nifty. The BSE Midcap gained 0.3 percent while Smallcap added 0.06 percent to it.

A long build-up was seen at the counters of MRF, Apollo Tyre and Adani Enterprise while there was a short build-up in PVR, Hindalco and Metropolis Healthcare.

Among specific stocks, a volume spike of more than 550 percent was seen in the stocks of Delta Corp and MRF while Ambuja Cement was witness to a volume spike of more than 450 percent.

Close to 240 stocks managed to create their new 52 week highs on the BSE including Allcargo, Apollo Tyre, Bajaj Holdings, Ceat Ltd, Eicher Motors, ICICI Bank, Maruti and Tata Investments.

Outlook for September 16

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd

We saw markets rallying sharply over the past week, so profit-taking was on expected lines. Volatility would continue due to concerns of a hawkish stance on rate hikes from the central banks amid rising inflation. In an uncertain market, stock & sector-specific buying activity could gain momentum.

Nifty has formed a bearish candle on daily charts and a double top formation on intraday charts indicating continuation of weakness in the near future. The trading set up suggests that a fresh round of selling is possible only after the dismissal of 17800 support level. If the index trades above 17800 then it could retest the level of 18100- 18150. On the flip side, below 17800, a quick intraday correction is not ruled out. Below which, it could slip till 17700-17650.

Rupak De, Senior Technical Analyst at LKP Securities

Nifty found resistance around 18100 leading to close in the red for the day. On the daily chart, a dark cloud cover pattern has formed suggesting waning bullishness. The trend for the few hours to 1 day may remain weak. However, the short term trend remains positive as the Nifty closed above the falling trend line on the daily chart. On the lower end, support is visible at 17700, below which the short term trend may become weak. On the higher end, resistance is visible at 17900/18100