Market extends losses as IMF#39;s forecast weigh on sentiment

The Indian market remained in the negative territory for the second consecutive day on January 21 as the market benchmarks Sensex and Nifty ended lower as IMF’s gloomy forecast hit the risk appetite of investors.

Let’s take a look at the final figures on Dalal Street – Sensex closed with a loss of 205 points, or 0.49 percent, at 41,323.81, while Nifty finished 55 points, or 0.45 percent, down at 12,169.85.

BSE Midcap index ended the session with a loss of 0.21 percent but the Smallcap index ended flat.

“The bears continued to dominate for the second consecutive session as IMF cut India’s GDP growth forecast to 4.8 percent for FY20E which impacted domestic sentiments. Further, the global cues also remained unsupportive in today’s trade as Moody’s cut its rating for Hong Kong markets. We reiterate our cautious view on the Indian markets given the stretched valuation and muted start to the earnings season,” said Ajit Mishra, VP – Research at Religare Broking.

Mishra is of the view that the IMF growth forecast cut to 4.8 percent is likely to raise hopes amongst market participants of a big bang Budget which may drive momentum for sectors in the coming sessions.

Other than the concerns on the economy, the unimpressive December quarter earnings and caution ahead of Budget, too, were at play to keep the market in the lower terrain.

“Investors are booking profit in mid and small-caps after the decent pre-budget rally. Subdued Q3 results compared to the solid expectations have triggered a consolidation in the market,” said Vinod Nair, Head of Research at Geojit Financial Services.

Nair believes this is a rational reaction of the market which will continue in the short-term and can reverse as per the final outcome of Budget and Q3FY20 results.

Top Nifty gainers: Bharti Infratel, Zee Entertainment, BPCL

Top Nifty losers: Tata Steel, Mahindra & Mahindra, Tata Motors

Stocks & sectors:

Most sectoral indices closed the day in the red, with BSE Realty, Power, Metal, Auto and Utilities falling over a percent each.

However, BSE Telecom bucked the trend and closed 2.12 percent higher, supported by gains in shares of Bharti Infratel, Vodafone Idea and Bharti Airtel.

As many as 223 stocks, including Dishman Carbogen Amcis, Reliance Power and Reliance Capital, hit their lower circuits on BSE. On the other hand, 203 stocks, including Srei Infrastructure Finance and Indiabulls Integrated Services, hit their upper circuits.

Havells India and Reliance Capital featured among the 77 stocks that hit 52-week lows on BSE.

Volume spike of 100-200 percent was seen in stocks like PVR, ICICI Prudential Life Insurance Company and Cholamandalam Investment and Finance.

Long Buildup: Vodafone Idea, Bharti Infratel and RBL Bank

Short Buildup: Tata Steel, PFC, Berger Paints

Stocks in the news:

Shares of Suven Life Sciences fell 93 percent as the stock traded ex-demerger of its CRAMs business with effect from today.

Shares of tractor maker Escorts fell 1.29 percent after ace investor Rakesh Jhunjhunwala reduced his stake in the company.

Shares of Hindustan Zinc fell 2 percent, a day after the company posted a 26.7 percent decline in net profit at Rs 1,620 crore for the December 2019 quarter.

After incurring a loss of 2 percent in intraday trade, shares of private sector lender Kotak Mahindra Bank rebounded to end the day with a nominal gain of 0.46 percent, a day after the bank registered a 23.62 percent year-on-year (YoY) growth in Q3FY20 profit at Rs 1,595.9 crore.

Shares of Vodafone Idea surged 22 percent after the Supreme Court agreed to hear the modification plea on giving telecom players more time to pay off AGR related dues which total over Rs 1 lakh crore.

Technical view:

Nifty formed a bearish candle on the daily chart.

“The index has support near 12,100-12,050 zone and resistance is coming near 12,230-12,300 zone. Current chart structure looks weak, so traders can use resistance level to create shorts on the rise,” said Rohit Singre, Senior Technical Analyst at LKP Securities.

Amit Shah, Technical Research Analyst with Indiabulls Ventures told that Nifty found support near 12,150 which is an important one and a decisive breach below 12,100 would be near-term negative for the markets.