Profit booking hits D-Street; Nifty holds 9,200; Sensex down 261 points

The Indian market reversed gains in the last hour of trade on May 5 as investors booked profits at higher levels. The Nifty50 reversed gains after hitting 9,450 levels and the S&P BSE Sensex closed below 32,000.

The final tally on D-Street: the Sensex closed 261 points lower at 31,453 while the Nifty dropped 87 points to end at 9,205.

Sectorally, the action was visible in power, energy, and oil & gas indices while profit-taking was seen in realty, bankex, finance, healthcare and capital goods stocks.

Broader markets underperform, with the S&P BSE Midcap index and the S&P BSE Smallcap index ending lower by a percent each.

Profit booking hit D-Street at higher levels as concerns over muted earnings, the impact of extension in lockdown and rising coronavirus cases weighed on sentiment.

“We feel the muted earnings combined with looming uncertainty over the economic situation due to extended lockdown have started haunting the participants. Besides, global cues are further adding to their worries,” Ajit Mishra, VP – Research, Religare Broking Ltd told Moneycontrol.

“In such a scenario, it’s prudent to maintain a ‘bottom-up’ approach and use correction to accumulate quality names in a staggered manner. On the other hand, traders should align their position according to the market trend.”

Top Nifty gainers included ZEE Entertainment, ONGC, Power Grid, and M&M.

Top Nifty losers included Asian Paints, Tata Motors, SBI, Asian Paints, and Bajaj Finance.

Stocks & Sectors:

Sectorally, the S&P BSE Power index rose 1.2 percent, followed by the S&P BSE Energy index that was up 1.23 percent and the S&P BSE Utilities gained 0.53 percent.

Profit-taking was visible in the S&P BSE Realty index that fell 2.9 percent. The BSE Bankex was down 2.3 percent and the BSE Finance 1.9 percent.

A volume spike of more than 100 percent was seen in stocks like ZEE Entertainment, Asian Paints, Godrej Consumer Products, and Bharti Infratel.

Long buildup was seen in stocks like SBI Life, Voltas, InterGlobe Aviation, and Chola Finance.

Short buildup was seen in stocks like Voltas, Godrej Consumer Properties, Apollo Tyres, and UBL.

More than 140 stocks hit a fresh 52-week low that includes names like PVR, Voltas, Birla Corp, Godrej Industries, SBI, and Shoppers Stop.

Stocks in news

Ashok Leyland: The share was down almost 2 percent after the company sold no units in April due to the lockdown. In view of the lockdown, manufacturing activities and the company’s dealerships across India remained affected and recorded nil production and sales, it said.

AU Small Finance Bank: The stock hit a 5 percent lower circuit after Nomura downgraded its rating to ‘neutral’ from ‘buy’. The research firm also slashed price target by 53 percent to Rs 500 from Rs 1,065 per share.

Bharat Forge: The share jumped 3 percent after the company partially resumed manufacturing operations at its Baramati plant.

Graphite India: The share price was up almost 2 percent after the company resumed manufacturing at its graphite electrode plant in Durgapur, West Bengal, impervious graphite equipment plant in Ambad and GRP plant in Gonde, (both in Nashik, Maharashtra.

Marico: The stock was up over 4 percent after the company reported its Q4 numbers. Analysts said the company’s performance was relatively better than FMCG peers, adding that the company’s portfolio is better-placed to deal with Covid-19 led slowdown.

Technical View

The Nifty formed a bearish candle on the daily charts after two consecutive days in a row.

The index closed below its 13 days-EMA (9,271) that offered support on minor pullbacks in the recent rally.

As long as the Nifty remains below 9,450, one should expect a weaker trend. In the next session, if it trades below 9,190 for at least 30 minutes then it shall extend its corrective swing towards its critical support of 8,900 levels by next one or two trading sessions, say experts.

The near-term strength in the index shall not be expected unless it closes above 9450 levels, they say.

For the time being, traders should avoid long positions, whereas fresh shorting can be considered below 9,190 for a target of 8,900, with a stop above 9,275 levels on a closing basis.

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