Profit booking, FO expiry and PM Modi’s address pulled indices lower

A complete U-turn seen in the market in late trade caught many by surprise. The Nifty50 put up a strong show in the early trade rising over 100 points on March 27 but bulls failed to keep the momentum going at higher levels.Benchmark indices wiped out some of the gains made in the previous trading session. The S&P BSE Sensex fell by about 100 points while the Nifty50 failed to hold on to 11,500.

The final tally – the S&P BSE Sensex closed 100 points lower at 38,132 while the Nifty50 closed 38 points down at 11,445.

In terms of technical, Nifty50 closed near its 5-day exponential moving average (EMA), which is a good sign because this short term moving average has been acting as crucial support for the index since February 19.

Also, the Nifty index picked up steam and reached an intraday high of 11,545 in anticipation of something much more relevant for the markets ahead of PM address to the nation.

In an address to the nation, Prime Minister Narendra Modi said that India successfully conducted an anti-satellite (A-SAT) missile test on March 27, becoming the fourth country to do so.

The gains started to fizzle out after the announcement and eventually, the index gave up gains to turn negative as traders prefered to book profit at higher levels. Apart from PM address that fell flat for markets, the March F&O expiry due on March 28 is also likely to cause volatility in markets, suggest experts.

“Market gained in morning trade led by strong global cues and RBI’s forex swap that led to some strength in Indian rupee. The fall in the market was led by profit booking and also to some extent a section of the markets might be expecting big bang announcements from the PM address to the nation that fell flat,” said Siddhartha Khemka, VP, Head of Research (Retail), MOSL.

“Given the fact that the announcement was not related to the economy and elections must have triggered profit booking in markets. Investors are advised to use dips to buy into markers,” he said.

The Nifty index corrected from an intraday high of 11,545 before closing 0.3 percent lower at 11,445. The broader markets outperformed the benchmark as BSE Midcap and Smallcap both registered gains of 0.6 percent each.

The sectoral indices witnessed a mixed trend. While banking and consumer durables saw healthy buying, other sectors like healthcare, auto and oil & gas were the top losers.

Stocks in news:

Shares of Wockhardt added 2 percent after the company received clearance certificate from Ireland drug regulator.

ICICI Prudential Life Insurance Company shares gained 9 percent after its offer for sale issue by promoters received an overwhelming response from non-retail investors.

Strides Pharma Science added 3 percent after Macquarie upgraded the stock to outperform from neutral, citing likely strong earnings growth in the next financial year.

Shares of Jet Airways gained over 3 percent after media reports claimed that the beleaguered airlines will get back its fleet within two months.

Shares of Unitech rose over 4 percent after the company successfully entered into a Share Purchase Agreement (SPA) with Sterling and Wilson Private for sale of entire issued and paid up share capital of Unitech Power Transmission.

Global Update:

The European markets are trading lower amid fears over potential US recession.

Asian indices ended mixed on concerns over global economic growth. Nikkei was down 0.23 percent at 21,378.73, while Shanghai Composite was up 0.85 percent at 3,022.72

Kospi was down 0.15 percent to end at 2,145.62 and Hang Seng was up 0.6 percent at 28,728.25.