Caution ahead of polling drags Sensex 354 pts; deploy money gradually

Equity benchmark indices ended in the red on April 10. Investors remained cautious ahead of the first phase of central elections, set to be held on April 11, and US-Europe trade tensions.

The Nifty after rangebound trade extended losses gradually in later part of the session and closed below psychological 11,600 level, falling 87.70 points to 11,584.30.

The 30-share BSE Sensex fell 353.87 points or 0.91 percent to close at 38,585.35, dragged by banking and financials and technology stocks.

“The current market correction was triggered by the forecast of a below-average monsoon. Though strong fund flow will ensure that market correction is limited,” Shailendra Kumar, Chief Investment Officer at Narnolia Financial Advisors told .

Jagannadham Thunuguntla, Senior VP and Head of Research (Wealth), Centrum Broking said, “A bit of correction after a strong rally may be healthy for the market. The movement going forward will be driven by results season and political developments.”

These experts said investors should deploy money in phases right now to take advantage of uncertainties around the election and remain focused on the quality stocks as markets can turn further volatile in the next fortnight.

Technically, the Nifty formed a bearish candle on the daily charts. If the index decisively breaks April 10 low of 11,571.75, then selling pressure could be seen, experts said.

“Traders can continue to be on the short side and can increase their exposure on the short side once 11,549 breaks on a closing basis. The initial target area on the downside is at the junction of the 40-day exponential moving average and the daily lower Bollinger Band i.e. 11,300,” Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan said.

On the higher side, hurdle zone of 11,680-11,710 is expected to keep the pressure on the index, he added.

The broader markets outperformed frontliners and ended mixed amid weak breadth. The Nifty Midcap index was down 0.3 percent while Smallcap index gained 0.3 percent. About 974 shares declined while 757 shares advanced on the NSE.

The sectoral trend was mixed with Nifty Bank, Financial Service and Metal indices falling 1 percent each followed by IT (down 0.8 percent), whereas Pharma gained 0.8 percent and Realty rose 1.1 percent.

Stocks in news:

HDFC Bank fell 2 percent amid reports that private equity giant KKR & Co may offload 0.42 percent stake in the private lender.

Wipro gained 2.6 percent as the company said it would consider a proposal for share buyback on April 16.

TCS and Infosys were trading 2.5 percent and 1 percent down, respectively,  ahead of March quarter earnings report scheduled on April 12.

Tata Motors shares rallied 5 percent after its global wholesales increased sharply by 32 percent in March compared to previous month.

Hindalco Industries fell more than 2 percent after the company suspended operations at its Jharkhand plant.

Shares of Tata Sponge Iron rose nearly 3 percent after the company completed the acquisition of steel business undertaking of Usha Martin.

Praj Industries surged nearly 7 percent after the company signed a construction license agreement (CLA) with US-based Gevo, Inc. to offer technology for production of high energy renewable aviation jet fuels.

Global updates:

European indices were trading with marginal gains as market participants were closely watching the central bank’s monetary policy outcome scheduled later today.

Asian markets ended mixed with Japan’s Nikkei falling half a percent and South Korea’s Kospi gaining 0.5 percent. China’s Shanghai Composite was up 0.07 percent while Hong Kong’s Hang Seng was down 0.13 percent.