Nifty could retest 11,000; use any bounce to shed long positions

As the Asian market slipped to an 8-week low, Indian markets started the day on a weak footing and hit a fresh 2-month low on May 9.

The S&P BSE Sensex that fell for the seventh consecutive day in a row recovered slightly towards the close of the trade but still fell over 200 points while Nifty just managed to close above 11300.

The final tally on D-Street – the S&P BSE Sensex fell 230 points to 37,558 while the Nifty50 dropped 57 points to close at 11,301.

The fall in Nifty was led by losses in Reliance Industries that hit a 2-month closing low. The stock has lost about Rs 97,000 crore in market cap in just four sessions. TCS now overtakes RIL as the most valued company in terms of market capitalisation.

In terms of sectors, buying was seen in IT, consumer durables, realty, FMCG and auto stocks while selling pressure continued in energy, metals and telecom names.

Investors are advised to use any bounce to lighten their long positions if any because there is a higher probability that the index could retest 11,100 ahead of the elections, suggest experts.

“Investors should lighten the position on the bounce back. The VIX, which is at 25, could reach 30-32 as we head towards the election results. The best strategy would be to lighten positions, and an aggressive trader could use the opportunity to short stocks selectively,” Jay Thakkar, AVP – Equity Research at Anand Rathi told .

“The technical setup remains bearish. MACD is also in a sell mode, and after the breakdown from the range of 11,500-11,850, the next target for the index is placed around 11,100-11,150. As long as 11,500 trades below this level, the trend is likely to remain sideways to negative,” he said.

Stocks in news:

Reliance Industries fell 3 percent after brokerage firm Morgan Stanley downgraded the company to equal-weight, maintaining the target at Rs 1,349 per share.

Shares of ABB India fell 4 percent after recording a 41.3 percent decline in Q1 net profit at Rs 116.2 crore, compared to Rs 197.9 crore in the quarter ended December 2018.

Shares of Yes Bank rose 6 percent despite rating agency India Ratings downgraded bank’s long-term ratings to AA- with a negative outlook.

Asian Paints slipped over 2 percent after the consolidated profit came in lower by 1.7 percent year-on-year at Rs 487 crore in the quarter ended March 2019.

Global update:

European markets are trading lower as investors remain cautious on US-China trade worries.

Asian market also ended in the red with Kospi plunging 3.04 percent at 2,102.01 and Shanghai Composite falling 1.48 percent at 2,850.95.

Hang Seng shed 2.39 percent at 28,311 and Nikkei was down 0.93 percent at 21,402.13.

Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.