Profit booking on, 12000 a key hurdle

The market ended lower dragged by selling in banking and IT stocks. The Sensex shed 215 points to 40359 while the broader Nifty ended 54 points or 0.45 per cent lower at 11914.

The broader markets were also weak with both the BSE midcap index and the small cap index marginally lower.

“The consolidation phase below 12000 (for Nifty) continues. The region around previous all-time highs of 12100 is witnessing some profit booking. It's not at all unexpected to witness some retracement near all-time highs. Broader structure continues to remain positive and the uptrend is intact,” says Manav Chopra, Head of Research for Equity at Indiabulls Ventures.

Markets during the week tried to break the 12100 levels but inspite of Reliance’s above average stock performance, Nifty couldn’t break this magic level. Infact, Nifty small cap clearly reflects the current state of the market which is in a corrective phase since the beginning of the month. The current correction also conclusively proves that the bigger uptrend is still ahead and this is just the first correction after the corporate tax rally.

Technical view
“Indices are clearly experiencing a time-wise correction and despite banking index having a head start, the momentum did not last too long. Since the overall intraday range was small, the chart structure in recent consolidation does not change at all. On the higher side, Nifty is facing a sturdy wall at 11950 and on the lower side, 11802-11750 are seen as intraday as well as near term supports. For the coming session, traders need to keep a tab on above mentioned levels; but with a positional view, our bias still remains bullish and we advise traders to create longs in any such intraday declines. We reiterate that it’s a matter of time, we would see index traversing this intermediate barrier of 11950 to head towards all-time highs,” Sameet Chavan chief analyst technical and derivatives Angel Broking.

Although, indices are consolidating with no major momentum, bundle of individual stocks did extremely well for themselves. The Pharma space was clearly on a roll, especially some beaten down mid-cap names. Also, some of the marquee names from the Metal pack had shown good traction.

Market view
“The weakness in Banking and IT stocks was the major contributing factor behind dragging the markets down in today’s trading session. This has been the third consecutive session of key indices closing in the red, we believe it is largely an effect of profit booking in some key counters. The support received from the recent run-up in key telecom counters was also missing today. On the technical front, the level of 12,000 is seen as a key resistance by many market participants which adds up to the selling pressure. We believe post the short duration of profit booking, markets should reverse on a much more stronger footing,” said Joseph K Thomas Head of Research, Emkay Wealth Management.