Dalal Street Corner: Markets end with minor cut amid volatility; what should investors do on Thursday?

Halting the two-day rally, the Indian markets closed in negative with minor cuts, as the Sensex dipped almost 100 points and the Nifty50 retained sentimental level of 17200, dragged by metal and banks. 

On the contrary, the broader markets closed higher with mid-cap up marginally 0.08 per cent and small-cap up 0.13 per cent at the market close. 

Nifty Bank slipped by over 138 points or 0.39 per cent to 35045, dragged by private lenders such as Axis Bank and HDFC Bank. 

Of 50 scrips on the Nifty50, 19 advanced and 31 declined at the close. Auto stocks like Eicher Motor and Bajaj Auto jumped most by around 3.5 and 3 per cent respectively, followed by Sun Pharma. While SBI declined most by nearly 2 per cent, followed by Coal India, ITC each up over 1.5 per cent. 

Hospital and diagnostics stocks surge during Wednesday’s session after India sees a rise in active covid cases. In this regard, Nifty pharma top sectoral gainer today, similarly, gain in Apollo Hospitals kept midcap index afloat in green territory. 

While Bajaj Auto rose 3 per cent after announcing an electric vehicle unit in Pune for Rs 300 crore investment. And newly listed Supriya Lifescience gained for the second day after debut on Tuesday, now up over 60 per cent in two sessions. 

Vinod Nair, Head of Research at Geojit Financial Services said, “Outweighing weak sentiments in most sectors, the pharma sector aided the domestic market to close on flat with a positive bias.” 

“Emergency Use Authorization of covid vaccines Corbevax and Covovax along with the clearance of anti-viral drug Molnupiravir for restricted use has boosted the appetite for most pharma stocks,” 

FIIs were net buyers for the first time this month which helped the market. Multiplex stocks have taken a hit following closure of cinema halls due to stricter covid restrictions in Delhi while mid and small caps outperformed, Nair added in his post market comment. 

“In the past two trading days, the market witnessed positive momentum on the back of short covering ahead of December F&O expiry. However, market is expected to remain flat in next two trading days ahead of New Year holiday as many global markets being shut, Arijit Malakar, Head Research (Retail) of Ashika Stock Broking Ltd said in his post market comment.  

“The current concern for the market is that if other state governments that Delhi government follow the same then there will be again short term pause on the recovery of domestic economy,” he said.  

Apart from Omicron worries and central banks tightening, Malakar also pointed out that the high valuations or run-up ahead of fundamentals is the major cause behind the correction not only in the market but also in stocks. 

“17250-17300 is the crucial level to look out for; this market can enter a bullish phase only if it closes above 17300. Until then the markets would be sideways and choppy,” Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments said in post market note. 

Hathiramani added, “16800 is good support for the index and a break of that will result in re-entry into the medium-term bear market. It is a wait and watches situation: 16800 on the downside and 17300 on the upside.” 

“Technically, the index has been trading in falling channel formation, crossing above the upper band of formation can show an upside rally in the counter. And it has been trading above 21&50-HMA which suggests strength in the counter,” Palak Kothari Research Associate Choice Broking said. 

Kothari added, “A momentum indicator STOCHASTIC and MACD trading with a positive crossover on the daily time-frame. At present, the Index has support at 17000 levels while resistance comes at 17300 levels, crossing above the same can show 17400-17500 levels.”