Market lost the two-week gaining momentum and ended lower amid volatility despite hitting fresh record highs, dragged by selling seen in the mid and smallcap stocks.
In the last week, BSE Sensex fell 484.33 points (0.79 percent) to close at 60,821.62, while the Nifty50 declined 223.65 points (1.21 percent) to close at 18,114.9 levels.
The broader indices – BSE Midcap and Smallcap indices fell 4 and 5 percent, respectively.
Among smallcaps, nearly 100 stocks fell between 10-22 percent including names like SREI Infrastructure Finance, DCM Shriram, MEP Infrastructure Developers, Balaji Amines, Angel Broking, Antony Waste Handling Cell, Balrampur Chini Mills, NLC India and Panacea Biotec among others.
On the other hand, 21 stocks added 10-40 percent including Rail Vikas Nigam, IRB Infrastructure Developers, Vishwaraj Sugar Industries, Jindal Worldwide and Transport Corporation of India.
“Despite a positive opening this week, domestic indices slipped into bear’s grip for four consecutive trading sessions led by profit booking in most sectors. The ongoing market rectification is not an overreaction and can sustain in the near term due to high valuations,” said Vinod Nair, Head of Research at Geojit Financial Services.
“High volatility in the domestic market forced foreign and domestic institutional investors to remain net sellers. Corrections were seen in stocks which were highly overvalued without any fundamentals justifying the high valuations.”
“Indian markets were impacted due to muted Q2 results which were weaker than forecasted due to high input cost. However, on a positive note, the long-term market trend is intact due to further re-opening of the economy, low interest cycle and fiscal & private spending,” Nair added.
In the last week, the BSE 500 index lost over 2 percent dragged by DCM Shriram, Balaji Amines, Balrampur Chini Mills, NLC India, PNB Housing Finance, Laurus Labs, Jubilant Foodworks and Sequent Scientific.
“Index closed a week at 18114 with loss of more than one percent on weekly basis and formed a dark cloud cover candle pattern on weekly chart which is bearish reversal candle pattern by nature, so if we slipped below 18k mark we may see short term reversal in index,” said Rohit Singre, Senior Technical Analyst at LKP Securities.
“The index has formed consecutive bearish candles throughout this week which hints bears are trying to grip the market from higher levels & which will be possible if we drag below the 18k mark in the coming week,” he added.
Where is Nifty50 headed?
Yesha Shah, Head of Equity Research, Samco Securities
The market may struggle to hold its footing next week and is likely to stay range-bound. After exceeding the 40,000 mark for the first time this week, Bank Nifty is likely to be in the limelight next week as various banks announce their results.
Given the improvement in economic activity, enhanced collection efficiency and stabilized asset quality, a favorable earnings outlook from this industry can be expected. Furthermore, with the monthly expiry coming up next week, market volatility may linger.
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities
We are of the view that for positional traders 20 day SMA or 17950 would be the key support level. On the flip side, 18300 and 18425 may act as a decisive resistance level.
For day traders, 18050 would be the sacrosanct support level and above the same, a pullback rally could be seen up to 18300-18350 levels. On the flip side, dismissal of 18050 could trigger one more leg of correction up to 18000-17975.
Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services
The market consolidation is likely to continue in near term given weak global cues and mixed earnings so far – affected by cost inflationary pressure and supply side issues on margin.
With skyrocketing valuations, many stocks prices have moved beyond their comfort zone thus leaving very little margin of safety.
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