The Indian equity indices ended on a lower note on Wednesday after hitting fresh record highs. There was a sudden sharp sell market witnessed during the afternoon trading hours. IT stocks dragged the indices, posting the biggest single-day fall since August 05.
The Nifty 50 closed the session 41 points or 0.16% lower at 25,377.55. The Sensex fell 131 points or 0.16% to end the day’s trading at 82,948. HDFC Bank, ICICI Bank, Bajaj Finance, Shriram Finance, and L&T were the five top contributors to the index, who tried holding the index. Market breadth is clearly in the favour of bears as 1,839 stocks declined and 958 stocks advanced out of 2,863 stocks being traded on NSE.
“Investors assess the potential for a short-term underperformance of equity given the elevated valuation and correction of metal prices. Commodities, including oil prices, are steadily declining, suggesting a potential tempering of economic growth. Investor caution is evident as gold prices rise, likely due to anticipated dollar weakness following the rate cut,” said Vinod Nair, Head of Research at Geojit Financial Services.
Some traders decided to take profits at these higher levels, which caused the market to close about 130 points below its peak for the day, said Rupak De, Senior Technical Analyst at LKP Securities. “On the downside, there is support at 25,300. If Nifty falls below this level, it could lead to a further drop towards the 24,900-25,000 range. On the upside, 25,500 is acting as a resistance level, meaning it may be difficult for the market to move above this point in the short term.”
Going ahead, in tomorrow’s session, market participants will digest the Fed meeting’s outcome of a likely 25 bps rate cut.
Sectoral Index
Outperforming the overall markets, the Bank Nifty added 562 points or 1.08% to close the day at 52,750.40. The Nifty Midcap 100 fell 428 points or 0.71% to end the session at 59,752.85. In the broader markets, smallcap and midcap stocks closed in the red.
Bank Nifty
“Bank Nifty clearly has been leading the upmove with contributions starting to come in from the key heavyweights of the index. The upmove is likely to continue towards 53,350 which is the previous swing high, and the support base now shifts upwards to the 52,200 – 52,100 zone,” said Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas.