Indian stocks remained under selling pressure for the second consecutive week and lost nearly 4 percent amid high volatility. Weak global markets, continued FIIs selling, soaring inflation, rising bond yields and expectations of further monetary tightening by the global Central Banks remained big concerns for investors.
For the week, BSE Sensex declined 2,041.96 points (3.72 percent) to close at 52,793.62, while the Nifty50 shed 629.05 points (3.83 percent) to end at 15,782.20 levels.
In the month of May so far, Sensex and Nifty have lost more than 7 percent each.
During the week gone by, all the sectoral indices ended in the red with BSE Metal and Power indices falling 13 percent each. BSE Telecom index shed 6.7 percent and Realty index declined 5.8 percent. In broader market, the BSE Mid-cap index lost 5.6 percent, Small-cap index shed 6.5 percent and Large-cap Index declined 4.4 percent.
“Monday’s session started on a nervous note as global sentiments remained nervous over the weekend. The index remained in a range throughout the first half and despite some challenges, Nifty managed to hold 16000 on a closing basis. However, on Thursday, the banking finally succumbed to the sell-off, leading the Nifty below the psychological point to mark the lowest close in the last ten months,” said Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One.
“On Friday, we started off significantly higher on the back of global relief; but once again our market failed to sustain at higher levels and eventually erased all gains in the latter half. With this, Nifty once again lost nearly 4% on a weekly basis,” he added.
During the week gone by, Foreign institutional investors (FIIs) sold equities worth Rs 19,967.57 crore, while domestic institutional investors (DIIs) bought equities worth Rs 18,202.10 crore.
In the month of May so far, FIIs have sold equities worth Rs 32,701.03 crore and DIIs purchased equities worth Rs 26,735.36 crore.
In this week, more than 250 smallcap stocks shed between 10 percent and 30 percent, with Birla Tyres, TV Today Network, Privi Speciality Chemicals, KBC Global, Dishman Carbogen Amcis, Indostar Capital Finance, GRM Overseas, Gujarat Narmada Valley Fertilizers & Chemicals, TGV Sraac, Future Retail, Future Supply Chain Solutions, Vikas Lifecare, RSWM, Cosmo Films, Kamdhenu, Nahar Poly Films, Take Solutions, Pricol and Oriental Aromatics losing over 20 percent.
On the other hand, TD Power Systems, Texmaco Infrastructure & Holdings, Shree Pushkar Chemicals and Fertilisers, Avanti Feeds, Elecon Engineering Company, IFB Industries and Texmaco Rail and Engineering were among major gainers.
“Global and domestic equity markets saw sharp decline this week as investors are worried about growth expectations amid elevated inflation levels. Sensex 30 and Nifty 50 index was down by close to 3%. BSE Midcap and BSE Smallcap index saw higher correction in the range of 5-6%. Almost all sectoral indices reported decline this week,” said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.
“In India, the CPI inflation in April 2022 surged to 7.79% (March 2022 : 6.95%), while March 2022 IIP growth remained subdued at 1.9% (February 2022: 1.5%).”
“FII’s continued their selling of Indian equities this week. Rising bond yields, high inflation levels and monetary policy tightening action by Central Banks globally will weigh on near term sentiments which could keep markets volatile. Stock specific action will continue due to ongoing result,” he added.
Among Midcaps, JSW Energy, Honeywell Automation, Voltas, Adani Power, Torrent Power, Indian Hotels Company, Canara Bank, Kansai Nerolac Paints, IDBI Bank, Steel Authority of India and Info Edge India lost between 10-17 percent.
Among BSE 500 index fell nearly 5 percent dragged by Dishman Carbogen Amcis, Adani Green Energy, Indostar Capital Finance, Gujarat Narmada Valley Fertilizers & Chemicals, Adani Transmission, Indiabulls Housing Finance, Vardhman Textiles, Elgi Equipments, Vedanta, Hatsun Agro Products and JSW Energy.
“The bears had a complete grip on the markets throughout the week as the minor pullbacks got sold into and Nifty lost almost 4 percent during the week and ended below 15800. The short term trend for the index continues to be negative and although the momentum readings are oversold, we are not witnessing any significant pullbacks,” said Ruchit Jain, Lead Research, 5paisa.com.
“In strong corrective phases, we usually see such moves where momentum readings can remain oversold until the prices complete their corrective phase. In the F&O segment too, most of the positions built by the FIIs are on the short side and their ‘Long Short Ratio’ in the index futures segment is at its lowest which is not seen since quite some time. The sectoral indices too have not yet shown any signs of reversal or bottoming out,”he added.
Where is Nifty50 headed?
Yesha Shah, Head of Equity Research, Samco Securities.
As the result season approaches its climax, D-Street will move in sync with global news flow. Next week India’s WPI data will be released and the much-anticipated IPO, LIC, will be listed on the exchanges.
Apart from these, no other major events are expected. In absence of any positive catalysts, indices are expected to remain under pressure as selling is emerging on every bounce.
Investors are therefore urged to remain on the sidelines since it is preferable to wait out the storm than to go bottom fishing during such turbulent phases.
Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities:
For traders, 15900 would act as a key resistance level and below which the index could slip till 15650. However, 15900 would be the immediate trend reversal level for the bulls and above which we could see a strong pullback rally up to 16100-16300.
Palak Kothari, Research Associate at Choice Broking:
Technically, The Nifty has formed a bearish candle on the weekly chart which indicates downside movement for the upcoming session. Moreover, Nifty has faced resistance from rising trendline and showed selling pressure which is a sign of selling of higher levels. In addition, Nifty has been sustained below the neck line of the Head & Shoulder pattern which indicates southward direction for the upcoming session.
However, the momentum indicators MACD & Stochastic were trading with a negative crossover and entered the oversold zone. However, till now, there is no reversal sign. The Nifty may find support around 15700 levels, while on the upside 16100 may act as an immediate hurdle for the Nifty crossing above the same can attract fresh buying. On the other hand, Bank nifty has support at 32600 levels while resistance at 34000 levels.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.