Taking Stock | Market spooked by Fed's hawkish stance; Sensex down 581 points, Nifty below 17,200

After a sharp recovery in the previous session, Indian benchmark indices plunged more than 2 percent intraday on January 27 after Federal Reserve chair Jerome Powell signalled an interest rate hike in March.

The market recovered from the day’s low but not enough, as the Sensex closed 581.21 points, or 1 percent, down at 57,276.94, and the Nifty ended 167.80 points, or 0.97 percent, lower at 17,110.20.

The Federal Reserve on January 2 said it was likely to hike interest rates in March and reaffirmed plans to end its bond purchases that month in what Powell pledged would be a sustained battle to tame inflation, Reuters reported.

“As the Fed left key interest rates near zero, its hawkish commentary quickly washed away gains in global markets leading to a gap down opening in indices back home,” said S Ranganathan, Head of Research at LKP Securities.

“As FPI continued to book profits from Indian equities, value stocks made a comeback with the PSU Bank index rallying over 5 percent in afternoon trade, well supported by auto stocks to stage a smart recovery. As IT & pharma stocks witnessed profit taking, textile stocks were sought after in the broader market on the back of earnings,” he added.

HCL Technologies, Tech Mahindra, Dr Reddy’s Laboratories, TCS and Wipro were the top Nifty losers, while gainers included Axis Bank, SBI, Maruti Suzuki, Cipla and Kotak Mahindra Bank.

Among sectors, Nifty PSU bank index was up 5 percent, while auto and bank indices rose 0.3-0.7 percent. However, selling was seen in Nifty IT, metal, pharma, FMCG and energy names.

The broader indices performed in line with main indices, with BSE midcap and smallcap indices falling 0.8-1.2 percent.

Stocks and sectors

On the BSE, IT index fell 3 percent and selling was also seen in the capital goods, FMCG, healthcare, metal, oil & gas, power and realty stocks. On the other hand, auto and Bankex indices rose 0.4-1 percent.

A long build-up was seen in Canara Bank, Shriram Transport and RBL Bank, while a short build-up was seen in the Torrent Pharma, Indiamart Intermesh and Coforge.

Among individual stocks, a volume spike of more than 200 percent was seen in Escorts, NALCO and Torrent Pharma.

More than 100 stocks, including Raymond, PSP Projects and Maruti Suzuki, hit a 52-week high on the BSE.

Outlook for January 28

Rahul Sharma, Co-owner, Equity 99

For the Nifty, 17,060 will act as strong support. If this level is breached intraday, the next support will be around 16,990 after which the market may take support at 16,880 levels.

On the upper side, 17,185 will act as strong hurdle rate, if this level is breached than next resistance will be around 17,250, post which we might see 17,300 levels.

Rupak De, Senior Technical Analyst, LKP Securities

Volatility was predominant during the day as the Nifty traded in a 300-point range. On the lower end, the Nifty held the recent low of 16,836, which it made in early trade on December 25. So the Nifty has to respect the support of 16,825.

The market is likely to remain volatile. On the lower end, support is visible at 16,825-16,800. A decisive fall below 16,800 may trigger resumption of the corrective phase. The Nifty will remain in the recovery mode as long as 16,800 is held.

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