Equity indices closed 1% lower in a volatile trading session amid profit booking in global markets. Falling for the third straight session, Sensex ended 530 points lower at 48,347 and Nifty lost 133 points to 14,238.
Airtel, UltraTech Cement, Axis Bank, L&T were among the top gainers while M&M, Maruti, NTPC, ITC traded as the top losers today. Sectorally, gains in metal, pharma, banks and financials were capped by losses in IT, PSU Banking, realty and auto indices.
Last Friday, Sensex ended 746 points lower at 48,878 and Nifty closed 218 points lower at 14,371.
Keshav Lahoti-Associate Equity Analyst, Angel Broking said,"Today, YES Bank closed down by 3.8% after the private sector lender has posted a net profit of Rs 151 crore in the third quarter ended December 2020 and said it will not be raising capital via equity soon. Heavyweight Reliance Industries tumbled by 5.3% on reporting a 13 per cent rise in quarterly net profit. UltraTech Cement also closed down by 3% even after its quarterly results beat on all the fronts."
Traders said volatility is expected ahead of Derivatives expiry day.
Overseas, US markets closed lower on Friday as investors factored in prospects of new US President's stimulus package and focused on FOMC meeting scheduled this week. The S&P 500 and Dow finished in the red while the Nasdaq Composite closed at a record high.
Asian stocks were mixed in Monday's trade as investors continue to monitor the situation surrounding the coronavirus pandemic. Traders said investors watched developments around Covid-19 vaccine, against the mutating coronavirus which has produced a number of potentially more infectious variants.
Vinod Nair, Head of Research at Geojit Financial Services said,"Indian markets witnessed a highly volatile trade and closed in red due to weak global market and reports of Indo-China border tension. The downside was equally contributed by all the sectors except pharma which traded in the green. Policy decisions of the US Fed meeting which will commence tomorrow will drive the global market in the coming days."
Global stocks continued correcting in today's session, with some positivity registered in Asian counterparts, as investors locked profits after a recent rally that was driven by hopes of a massive US economic stimulus plan by incoming President Joe Biden.
Further, profit booking was anticipated after index majors like RIL, JM Financial, JSW Steel, YES Bank, Birla Corp, UltraTech Cement, Gland Pharma etc posted Q3 earnings on Friday. Earning figures from Larsen & Toubro, Kotak Mahindra Bank, Aarti Drugs, APL Apollo Tubes, Astec Lifesciences, Can Fin Homes, Chennai Petroleum Corporation, ICICI Securities, Mahindra Holidays & Resorts India, Navin Fluorine, that will be declared during today's session, will further guide the market.
Ajit Mishra, VP - Research, Religare Broking said,"It's a holiday-shortened week and we expect volatility to remain high ahead also due to the scheduled expiry of January month derivatives contracts. Besides, we're seeing participants speculating on the probable announcements in the Union Budget, which is further adding to the volatility. Amid all, we reiterate our view that a decisive close below 14,200 in Nifty would derail the present momentum so participants should align their positions accordingly."
Sneha Seth (Derivatives Analyst, Angel Broking) said," It is the third consecutive sessions wherein we witnessed decent profit booking in Nifty futures; in case of banking index, a good amount of shorts were formed. During the series, we observed profit-booking by stronger hands and in the week gone by they also added few bearish bets in index futures segment. As a result, their long-short ratio plunged below 60%. In index options front, we saw fresh writing in 14300-14500 call strikes. On the other side, except for some build-up in 14200 put, we hardly saw any relevant open interest activities in the put strikes. At the current juncture, around 14200 is an immediate support zone and any correction below this may drag index towards 13900-14000. On the upper side, 14300-14400 shall act as a hurdle now."
On the currency front, Indian rupee rose for the fifth straight day to end 3 paise higher at 72.94 per dollar, despite heavy selling in the domestic equity market.
Sugandha Sachdeva VP-Metals, Energy & Currency Research, Religare Broking said, "The rupee has managed to hold its fort around the 72.90 to 73 levels, but given the selloff in equities and the likelihood of a rebound in the dollar index, we see the trend tilting slightly towards depreciation going forward. In terms of the global cues, the Federal Reserve's policy decision this week is not expected to be ultra-dovish. More so, markets will be watching the Fed's guidance on rates and any outlook on its bond-buying plan. Another key factor to watch out for the rupee is India's federal budget. If the government compromises on the fiscal guidance by a huge margin in an attempt to revive the economy, the rupee may take a hit and further depreciation looks likely on the cards. We expect the Indian rupee to hover in the range of 72.50-73.50 in the near term."
Kshitij Purohit, Product Manager, Currency & Commodities at CapitalVia Global Research said," Technically, USDINR pair closed firm against the US Dollar taking cues from strong economic data and weakness in the dollar index. USDINR spot is trading below the phycological level of 73.00 preceding 21-day SMA is currently around 73.195, which challenges any recovery moves and below this it may continue in the falling trend pattern wherein the support of the pair is at 72.60 levels USDINR option data suggesting the market will keep trade in a narrow range. Once Pair breaks the support then it may come down towards 72.20 levels."