RBI shock hits D-St for second day; Nifty holds 11,900

Conflicting signs from the US and China on the trade deal and the Reserve Bank of India’s status quo on rates put brakes on the bull surge as both the Sensex and the Nifty closed the week with losses of about 1 percent.

The Nifty, which hit a record high of 12,158 last week, failed to hold onto the momentum and closed with losses of 1.1 percent for the week ended December 6.

The Sensex, which rose to a record high of 41,163 last week, ended with losses of 0.85 percent for the week ended December 6.

Let’s look at the final tally for December 6–the Sensex fell 334 points or 0.82 percent to 40,445 , while the Nifty closed with losses of 0.81 percent to 11,921.

Sectorally, action was seen in the telecom space, while selling pressure was witnessed in the public sector, auto, finance, realty and power index.

The broader market underperformed – the BSE Midcap index fell 1.2 percent, while the BSE Smallcap index was down 0.86 percent.

Experts are of the view that selling was largely seen in the rate-sensitive pack after the RBI policy outcome. The consolidation may continue in the coming week as well, but 11,700-11,800 is likely to act as crucial support for the Nifty, they say.

“Selling was witnessed across the board wherein PSU banks and media pack lost maximum. The broader indices too remained under pressure and lost over a percent each,” Ajit Mishra, VP -Research, Religare Broking Ltd, told Moneycontrol.

“The recent decline shows disappointment among the participants post the RBI policy outcome as the majority were hoping for a rate cut. And, since the Nifty has breached its immediate support at 11,900, we may see further profit taking ahead. However, we feel it’s a healthy correction and 11,700-11,800 zone would continue to act as a cushion,” he said.

Top Nifty gainers – JSW Steel, Kotak Mahindra Bank, Bharti Infratel

Top Nifty losers – Zee Entertainment, SBI, YES Bank

Stocks & sectors

Sectorally, the BSE Telecom index rose 0.2 percent while selling pressure was seen in the BSE Public Sector index which fell 2.3 percent, followed by the auto index, which was down by 1.78 percent, and the BSE Realty index closed lower by 1.3 percent.

Volume spike of 100-300% was seen in stocks like Voltas, RBL Bank, Divi’s Laboratories, Pidilite Industries, Dr Reddy’s, and Century Textiles.

Long Build-up: Equitas, Berger Paints, Bharti Infratel

Short Build-up: RBL Bank, Apollo Tyres, Dish Tv

Stocks in news

PSU banks bleed: Share price of PSU Banks shed up to 6 percent on December 6 after the RBI pressed pause on rate cut. Central Bank of India, SBI, PNB, Union Bank, Bank of Baroda and Canara Bank were the top losers.

Vodafone Idea: Vodafone Idea share price fell 5 percent on December 6 after Chairman Kumar Mangalam Birla said, “Vodafone Idea will shut down if the government does not provide any relief.”

YES Bank: Yes Bank ended lower by about 10 percent after Moody’s downgraded the bank’s ratings and assigned a negative outlook.

Gati plunged 5 percent and Allcargo Logistics added 3 percent on December 6 after the latter acquired majority stake in the courier company.

Vascon Engineers: Vascon Engineers share price gained more than 3 percent on December 6 after the company won an order from the Airports Authority of India.

Andhra Bank: Andhra Bank share price shed over 3 percent on December 6 after the Reserve Bank of India (RBI) imposed a penalty of Rs 25 lakh.

Technical View

The Nifty formed a bearish candle on the daily charts but managed to close above its crucial support at 11,900 levels

The index closed below its 5, 20-Day Moving Average, and 13-Day EMA

In the next couple of trading sessions if the Nifty slips below 11,888, then correction shall initially get expanded up to 11,800.

Experts feel that for time being upsides shall remain capped around 12,081 levels.

Positional traders can continue to remain short on the index with a stop above 12,000 levels on a closing basis and look for a bigger targets placed around 11,730.

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