Dalal Street Corner: Sensex, Nifty close 0.6% amid weak sentiment – what should investors do on Wednesday

The Indian markets closed negative during Tuesday’s session, as both the benchmark indices slipped over 0.6 per cent, led by banking heavyweights, along with Reliance Industries. In an otherwise weak market, auto stocks shined, followed by the IT index aiding the market from further fall on Tuesday. 

On the other hand, broader markets outperformed benchmark indices as mid-cap closed with minor cuts, down 0.27 per cent, while small-cap gained over 0.5 per cent at the market close today. 

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Of 50 scrips on the Nifty, 12 stocks advanced and 38 declined at the market close. Index heavyweight Reliance Industries, as well as metal stocks such as Hindalco, Tata Steel, dragged the market most. On the contrary, the auto stocks gained the most amid reports of improvement in the chip shortage issue. 

In the IPO segment, Tarsons Products Limited’s initial public offer was oversubscribed by 3.38 times at around 04:17 pm, on the second day of the issue. The retail investors queued most for the offer. While Go Fashion (India), a woman’s apparel company, is all set to launch its IPO on Wednesday. 

Mohit Nigam, Head - PMS, Hem Securities said, “On the technical front, the markets are trading around the key support zone of around 18000 levels and if it sustains above this level for a few more sessions, we can see a good up move in the near term. Immediate support and resistance in the Nifty 50 are 17850 and 18250, respectively.” 

Domestic sentiments impacted by surging inflation owing to a spike in demand and supply chain, as per Arijit Malakar, Head Research (Retail) of Ashika Stock Broking Ltd. 

He added, “Traders have eyes on the virtual summit between Chinese President Xi and his US counterpart Biden with ease in the trade as a potential outcome. The recent WPI and CPI data raised the concern of spiraling inflation in the economy which spooked the market.” 

“Slow growth in Industrial production data on the high base of last year also dented the market sentiment. Further, RBI and other global brokerages have been cautious about Indian equity's prospects, thus highlighting the risk to investment returns due to stretched valuation and elevated inflation,” Malakar said in his post market comment on Tuesday. 

“The index has formed a bearish candle on the daily time frame, shows weakness in the counter. On the hourly chart, the index has been trading with lower highs lower lows, which point out some corrections for the next trading session,” Palak Kothari Research Associate at Choice Broking says 

“Furthermore, it has given closing below 21 DMA as well as the Stochastic indicator is trading negative crossover, which points to weakness in the counter for the next trading sessions. At present, the index has a support level of 17800, while resistance is at 18250 levels,” Kothari added. 

Vijay Dhanotiya, Senior Research Analyst at CapitalVia Global Research said, “The market witnessed some correction and an attempt to hold the level around 18000 levels. Our research suggests that sustaining above 18000 will be an important level for the market to stay positive in the short term.” 

He suggests, “If the market is able to sustain the level of 18000, it can witness a positive momentum in the market which can lead to the higher levels near 18250-18300. The momentum indicators like RSI and MACD indicating positive momentum in the market.”