Dalal Street Corner: Markets extend decline for second consecutive session; What should investors do on Tuesday?

Dragged by the auto, financial, and FMCG stocks, the Indian markets witnessed a recovery from day’s low level, to close negative for the second session on Tuesday. The Sensex slipped over 166 points and the Nifty50 settled below 17350. Market breadth flat with the advance-decline ratio at 1:1.  

While the broader markets closed mixed with mid-cap falling nearly a quarter per cent and small-cap up marginally 0.2 per cent. A key contributor to the Nifty50, the Nifty Bank closed flat with negative bias, down 0.08 per cent to 36893-level, mainly dragged by Kotak Mahindra Bank.

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Of 50 scrips on the Nifty50, 27 advanced, and 23 declined at the market close. ITC slipped almost 3 per cent at the close, as the company on Tuesday had called an investors and analysts meet. Followed by Bajaj Finance, which tumbled over 2 per cent, while Power Grid surged most of all by around 4 per cent.  

Axis Bank recovered in trade after positive management commentary, up 1 per cent and Lupin ends 7 per cent higher after US FDA clears the Goa unit with VAI status. 

In the IPO segment, Rakesh Jhunjhunwala-backed Metro Brands IPO issue was booked 3 times, led by strong QIB demand on the last day of the offer. While Medplus Health IPO has been filled 93 per cent on day 2 of the offer and Data Patterns IPO opened today and was subscribed fully. 

“Due to elevated levels of inflation and weak Asian markets, the domestic indices extended losses ahead of the US Fed policy announcement, Vinod Nair, Head of Research at Geojit Financial Services said in his post-market comment on Tuesday. 

He added, “Offsetting a favourable base effect and cut in levies on fuel, India’s CPI inflation rose to 4.91 per cent year-on-year in November as higher input costs forced producers to hike prices.”  

Moreover, India’s wholesale inflation soared to a 12 year high of 14.23 per cent YoY underpinned by mineral oil, base metals, crude petroleum and natural gas, according to Nair. 

“The Nifty is trading within the range of 17150 and 17600, as both levels are of extreme importance as a break of 17150 could take the index southward while a close above 17600 would signal an upward trajectory.” Manish Hathiramani Technical Analyst at Deen Dayal Investments said. 

Similarly, Rohit Singre, Senior Technical Analyst at LKP Securities said, “Nifty open gap down and showed a very sideways move throughout day with given close at 17325 with minimal and formed a Doji sort of candle pattern on the daily chart represents indecision in the markets.” 

He added, “The overall range for Nifty is coming at 17500 on the higher side and 17000 on the lower side right now nifty is trading in between so one can expect a sideways moment in coming sessions and final direction will be clear once we see either side breakout from mentioned range, immediate support is coming near 17250-17200 zone & resistance is coming near 17400-17500 zone.”