Banking weakness may hit Nifty hard

Domestic stocks edged lower in early trade on negative Asian stocks, however staged a strong recovery in mid-afternoon trade tracking positive opening in European stocks. Recovery continued in late trade.

The market remained volatile and settled marginally lower, tracking weak global markets and other local cues. It opened lower and gradually drifted in the first half however rebound in the Index majors trimmed the losses significantly by the end. Amid all, the reaction of the government and security forces on J&K terror attack further induced volatility. Mostly sectoral indices traded under pressure wherein pharma, metal and PSU banks were the top losers.

The benchmark indices, the Sensex and the Nifty ended with moderate losses. The Sensex was down 67 points or 0.19 per cent at 35,808, the Nifty 50 shed 21 or 0.2 per cent to settle at 10,724.

The broader market witnessed huge selling with the Mid-Cap and Small Cap indices plunged 1.18 per cent and 0.83 per cent respectively.

Sectors like metals (2.3 per cent), healthcare (2.27 per cent), auto (1.2 per cent) underperformed the Sensex, while power, oil & gas and telecom stocks saw buying interest.

Sun Pharmaceutical (3.9 per cent), Tata Steel (3.12 per cent), Vedanta (2.87 per cent), Hero MotoCorp (2.75 per cent) and Bajaj Finance (1.9 per cent) were the major losers in the Sensex pack, while NTPC (4.13 per cent), Power Grid Corporation of India (3.12 per cent), Reliance (1.47 per cent), L&T (1.31 per cent) and Bharti Airtel (1.05 per cent) were the Sensex gainers.

Technical View
Jayant Manglik, president, Religare Broking said, “We feel further decline in banking space may push the Nifty further lower. Prefer hedged positions in such scenario as other risk management techniques fail due to excessive volatility. The Nifty has next support around 10,550-10,600 while 10,800-10,800 zone would act as hurdle.

Market View

Vinod Nair, head of research, Geojit Financial Services, said “The market slid due to broad based selling across sectors as rising yield and weak rupee cast cloud over the investor’s sentiment. Volatility may continue due to lack of positive triggers in the domestic market while rising oil prices will impact domestic macros in the near term. The global markets turned negative due to obstacles in the US-China trade deal.”

Umesh Mehta, head of research, Samco Securities said, “The market was deeply oversold and therefore a bounce was expected, hence the Nifty recovered by the end of the day. But all the sectoral indices under the Nifty’s basket closed in red except for energy, Nifty PSE and Infra. Traders can sell on rise next week, as the inherent trend of the market is still weak.