Below is the Daily Market Commentary By Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd
Indian equity market opened positive but soon drifted into red and fell sharply by late afternoon. Nifty plunged 189 points (-1.3%) to close at 14,721, while Sensex fell 562 points (-1.1%) to end below 50k mark at 49,802. The broader markets fell more sharply with Nifty MidCap 100/Nifty SmallCap 100 down -2.5%/-2.2%. All the sectors ended in red with PSU Banks being the biggest loser – down -3.8%, followed by Energy (-3.1%). Metals, Media, Realty and Infra lost 2-3% while Private Banks, Financials, Auto, and Pharma were down 1-2%. India VIX fell marginally by 0.2% to 20.2 levels.
Global cues were weak as investors remained cautious ahead of the U.S. Federal Reserve policy outcome. Treasury yields also held near highest levels in over a year. On the domestic side, Nifty fell for the fourth straight session, weighed by weakness across all the sectors. Concerns over 2nd Covid wave and weak global cues led to the fall. Market was also cautious ahead of the weekly F&O expiry. On the Nifty, BPCL, ONGC, Tata Motors, Adani Ports & SEZ and Coal India fell the most, while ITC, TCS, Infosys and HDFC gained.
Technically, Nifty formed a strong Bearish candle on daily scale. Now, till it remains below 14900, weakness could be seen towards 14600-14500 while on the upside hurdles shift lower to 14950-15050. Decline in VIX even after market fall of 200 points is not giving any immediate clues. Cool down in VIX below 20 zones is required for bullish grip and smoother move in the market.
While the long term structure of the market continues to remain positive, it may face some hurdles in the near term due to concerns over the bond yields, commodity prices and risk of increase in inflation. In addition, resurgence of covid cases in India will be closely monitored in the near term for future market direction. Investors would react to the US Fed MPC outcome tomorrow which is expected to continue with its accommodative stance. Thus given the likelihood of high volatility continuing in the market for some time, investors would do well by accumulating good quality companies on decline in the market .
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