“Indian equity markets snapped its four day gains on the back of profit booking and weak global cues. Nifty50 opened positive and extended its move towards 10553. However it failed to sustain over there and fell down sharply to end the session at 10305 levels (166 points lower; -1.6%). Sensex ended 561 points lower (-1.6%) to close at 34,869 level. The overall market breadth was negative with Nifty Midcap 100/ Smallcap 100 down 1.4%/1.8%. All the sectors ended in red except FMCG which was up 0.5%. Private Banks (-4.0%) was the biggest loser followed by Financial Services, PSU Banks, Metals and Pharma which were down in the range of 2-3%.
Profit booking was seen in Bank Nifty which rallied ~11% so far this month. Even the global sentiments turned negative as the focus shifted towards record levels of coronavirus infections in several U.S. states, which remains a key concern. India too reported a record new ~16k coronavirus cases, taking the total count of those infected to more than 4.5 lakh. With most countries reopening their economies, small virus clusters in several places have emerged again triggering concerns of a second wave.
Given the sharp rally over the last few days, the market may take breather over here and consolidate for sometime. Investors would track global cues and development around coronavirus cases along with the geo-political tensions for any directional move. We would advise investors to stay cautious and focus more on stock specific action.
Technically, if Nifty holds below 10300 zones, then a profit booking decline cannot be ruled out. A hold below 10300 could see a drift towards 10180 and 10040 zones while resistance exist at 10400 then 10500-10550 zones”