Sensex, Nifty recover from lows, but volatility likely to stay

Indian markets recovered from early lows to close marginally in the red on January 8. The morning trade was volatile, in line with other Asian markets after Iran launched a missile attack against US troops in Iraq.

Fears were abated slightly as hopes grew that the United States would stop short of a strong retaliation after President Donald Trump tweeted “All is well!” and “So far, so good!”, Reuters reported.

Iran’s Foreign Minister Mohammad Javad Zarif also tweeted that the Iranians “do not seek escalation or war”, said the report.

Let’s look at the final tally on D-Street: the BSE Sensex fell 51 points to close at 40,817, while the Nifty ended 27 points lower at 12,025.

Sectorally, the action was seen in telecom, IT, and banking stocks, while profit-taking was recorded in capital goods, energy, oil & gas, and metals.

Broader markets outperformed, as the BSE Mid-cap index rose 0.08 percent and the Small-cap index gained 0.16 percent.

The mutual fund space had something to cheer about. The net equity inflow for December 2019 stood at Rs 4,432.2 crore against Rs 933 crore the month before, AMFI data showed.

Experts are of the view that investors should stay cautious and wait for a breakout above 12,200 before initiating fresh positions on the upside or a breakdown below 11,929.

“Markets settled with a marginal loss amid excessive volatility, in continuation with the prevailing corrective phase,” Ajit Mishra, VP-Research, Religare Broking Ltd, told .

“We do not see this volatility to fade away anytime soon and in fact, the prevailing earnings season would further add to the erratic swings ahead. We thus advise focusing more on stock selection and risk-management aspects. Also, keeping a close eye on global developments for cues.” 

Top Nifty gainers – Yes Bank, TCS, and Bharti Airtel, up more than 2% each

Top Nifty losers – IOC, L&T, Coal India, and Eicher Motors, down 2-4% each

Stocks & Sectors

Sectorally, the S&P BSE Telecom index rose 2.4 percent, followed by the S&P BSE IT index which was up 0.23 percent, and the S&P BSE Bankex closed flat but with a positive bias.

On the other hand, the BSE Capital Goods index was down 1.4 percent followed by the BSE Energy index that fell 0.88 percent and the BSE Oil & gas index was down 0.77 percent.

A volume spike of 100-400% was seen in stocks such as Coal India, Eicher Motors, UBL, NIIT Tech, Bharti Airtel, and Idea Cellular.

Long Buildup – NIIT Tech, Jindal Steel, MindTree

Short Buildup – NMDC, Eicher Motors, Coal India, BPCL

Stocks in news

Shares of Suzlon Energy shed 10 percent after the company said it had defaulted on loans worth Rs 7,256.38 crore that were to be paid on March 19, 2019.

Navin Fluorine International shares jumped 6 percent to a 52-week high of Rs 1,083.95 on the company’s Dewas plant commencing commercial production after cGMP capacity addition.

Yes Bank jumped 2 percent after the private lender said its board would meet on January 10 to consider fundraising.

Goa Carbon rose 5 percent after the company reported improved production in December 2019.

Technical View

The Nifty defended 50-day exponential moving average (DEMA) placed at 11,982 but failed to close above 50-DMA.

In the near term, markets may continue to remain volatile owing to the US-Iran tensions.

If the Nifty sustains above its 50-DEMA, then the possibility of the short-term trend turning sideways with a positive bias will remain higher.

The Nifty may remain in a range of 12,190–11,920 for a couple of trading sessions before witnessing a breakout in either of the directions, experts say.

Traders are advised to stay neutral.

The intraday low of 11,929 is the lowest level since December 12.

On the upside, 12,044, which is the intraday high, will be the first resistance to watch out for on January 9

Three levels: 11,929, 12044, 12200Get access to India’s fastest growing financial subscriptions service Pro for as little as Rs 599 for first year. Use the code “GETPRO”. Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the website or mobile app.