In addition, Bank Nifty significantly underperformed the benchmarks, closing the day down 1.65% compared to Nifty 50’s losses of -0.76%. Broader markets fared too poorly, with the Nifty Smallcap Index closing 4.01% worse.
The 30-share BSE Sensex ended lower by 523 points or 0.23% at 71,072.49 level while the Nifty 50 closed at 21,616.05 level, down 166.45 points or 0.76%.
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Analysts speculated that part of the disappointment can also be attributed to concerns about the inflation data that is expected to be released this week in the US and India.
According to official data released on Monday, the mining and power generation divisions experienced a decline in performance, causing India’s industrial output growth to decelerate to 3.8% in December 2023. December 2022 saw a 5.1% increase in manufacturing output as indicated by the Index of Industrial Production (IIP ).
“Falling in exchange margin requirements led to reduction in positions, mainly in mid and small caps. Apart from the pharma and IT sectors, selling was widespread, with notable struggles seen in PSU banks. The premium valuation gap between mid to large caps has narrowed to its all-time high. Despite a robust economic forecast, corporate earnings are expected to slow due to subdued operating margins. It will be a challenge for the broader market to support the premium valuation. Large caps are expected to stand out in the mid-term. consolidation,” said Vinod Nair, Head of Research, Geojit Financial Services.
Also Read: Stock market today: Nifty 50, Sensex end lower; mid hats, hats bleed; investors lose ₹7 lakh crores in a day
Stock market Last week
In the past week, Nifty 50 consolidated within a narrow range, but there was no lack of stock-specific momentum. Sector heavyweights such as PSU Banks, Oil and Gas, and Pharma outperformed, while private sector banks and FMCG stocks underperformed to drag the markets lower. Nifty 50 could not sustain above the 22,000 mark, and it ended the week below 21,800 with a weekly loss of one-third of a percent, said Ruchit Jain, Senior Research Analyst at 5paisa.
The Nifty 50 has consolidated in a range over the last few days, and if we look at the chart structure, recently the index has formed a bearish ‘Shooting Star’ candle on the daily chart, and the recent high around 22,127 is also similar to a ‘Double Top’. The index has not yet negated the pattern, which is a sign to be cautious in the near term. Also, the FIIs formed short positions in the index futures segment, with about 67 percent of the positions on the short side, and sold equities in the cash segment. This combination of selling in the cash segment and short formations in the index futures generally leads to correction phases, according to Jain.
Also read: Second boost for economy as factory output strengthens, retail inflation cools
Share Marketing Tips For This Week
Now, the above analysis (technical and derivative data) does not seem much bullish, and thus our markets could go through either a temporal correction phase (consolidation) or a price-wise correction phase, explained Ruchit Jain.
The 20-DEMA support is placed around 21,680, which would be seen as crucial support on a closing basis. A close below this support could result in a correction to the 21,450-21,400 zone. On the higher side, the index needs to surpass the recent swing high of 22,127 to negate the reversal pattern formed, which would then result in a continuation of the uptrend.
“Traders are advised to remain cautious and avoid aggressive longs at current levels until we see a break beyond the above mentioned range. Trading on a stock specific moment could be a better approach at the current juncture,” advised Ruchit.
Also Read: No review on action against Paytm Payments Bank: RBI govt Shaktikanta Das
Stocks to Buy This Week – Ruchit Jain
On stocks to buy this week, Ruchit Jain recommended two stocks – United Spirits Ltd and Apollo Hospitals Enterprises Ltd.
Here we list full details of Ruchit Jain’s stock recommendations:
United Spirits Ltd
According to Jain, the stock has been consolidating in a range in recent weeks, which appeared to be a time-wise correction phase. In all this consolidation, the 89-day EMA has acted as good support for the stock. The RSI oscillator has given a positive crossover, which suggests positive momentum, and thus the stock could resume its upward trend. Therefore, short-term traders can look to buy the stock in the range of ₹1,110–1,100 for potential targets of ₹1,170 and ₹1 220. The stoploss on long positions should be placed below ₹1 050.o
Ruchit stated that the stock has formed a “Higher Top Higher Bottom” structure and is thus on the rise. The prices are riding above the 20-DEMA support, and volumes have been good along with the price increase over the past week. Short-term traders can look for buying opportunities in the stock in the range of ₹6,440–6,420 for possible purposes of ₹6,680 and ₹6,850. The stoploss on long positions should be placed below ₹6,200.
Also read: Oil prices slide after rally last week on Middle East conflict, Brent crude at $81.65/bbl
Disclaimer: The above views and recommendations are those of individual analysts, experts and trading companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 13 Feb 2024, 06:53 IST