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Sensex, Nifty shed early gains, IT stocks slip; here's what led to last hour fall

Metal stocks such as JSW Steel, Jindal Steel, Tata Steel and Hindalco rallied today with more countries easing restrictions post the coronavirus lockdown, although gains were kept under check amid rising trade tensions between US and China


Rupa Burman Roy | May 26, 2020 | Updated 17:55 IST
Sensex, Nifty shed early gains, IT stocks slip; here's what led to last hour fall
Sectorally, gains in FMCG, consumer durables and metals were capped by the downside pressure witnessed across IT, pharma and telecom stocks

The benchmark market indices - Sensex and Nifty - gave up early gains by the afternoon session and ended Tuesday's trade lower amid increased volatility in the last hour. Extending decline for the second straight session, Sensex closed 63 points lower at 30,609, while the broader Nifty50 index ended 10 points down at 9,029. ITC, IndusInd Bank, HDFC Bank, Tata Steel, Titan, UltraTech Cement and L&T were among the top gainers on BSE Sensex pack.

Equity benchmarks closed lower despite the positive strong global cues, owing to weakness in SGX Nifty and selling pressure in IT and media stocks. Just as last week, the market is again consolidating in the narrow range of 9000-9200, on back of muted earnings season and rising number of coronavirus cases.

On the currency front, Indian Rupee closed at 75.66 per dollar at the internbank forex exchange, as compared to the last closing of 75.95 per US dollar.

Buzzing stocks

Sectorally, gains in FMCG, consumer durables and metals were capped by the downside pressure witnessed across IT, pharma and telecom stocks. While Bharti Airtel, TCS, Hero MotoCorp, HDFC and Zee Entertainment were among the top losers, JSW Steel, Eicher Motors, Ultratech Cement ITC, IndusInd Bank and Hindalco were the top gainers on NSE. Metal stocks such as JSW Steel, Jindal Steel, Tata Steel and Hindalco rallied today with more countries easing restrictions post the coronavirus lockdown, although gains were kept under check amid rising trade tensions between US and China.

"Globally, commodity markets were strong and the metal index outperformed in today's trade. This was driven partly due to measures announced to support the Chinese economy, which accounts for a major portion of the global demand for metals," said Vinod Nair, Head of Research at Geojit Financial Services.

Volatility

Volatility index, India VIX, plunged over 3 per cent to 31.37 levels.

Global markets

Asian markets were trading higher led by Nikkei which was up over 2% as Japan lifted its state emergency. Hong Kong was up after week-long unrest, on the back of China's plan for a national security law in the country.

US markets were closed for Memorial Day, although both US and European futures were trading positive on news that American biotech company NovaWax has started human study with their vaccine.

Vinod Nair, Head of Research at Geojit Financial Services said,"Global market cues were positive, on the back of additional stimulus measures and slow reopening of economies globally. The unabated rise of infections continues in India, which throws up further uncertainties with regards to extension of lockdown measures."

Fundamental analysis

"Nifty should see a decisive break from the prevailing range of 9000-9200 for any directional move," Ajit Mishra, VP - Research, Religare Broking, said. "We feel the upcoming derivatives expiry will keep the participants on their toes. We reiterate our cautious view and suggest keeping a close watch on the banking index for cues," he added.

"The unabated rise of infections continues in India, which throws up further uncertainties with regards to extension of lockdown measures. Globally, commodity markets were strong and the metal index outperformed in today's trade. This was driven partly due to measures announced to support the Chinese economy, which accounts for a major portion of the global demand for metals," Vinod Nair, Head of Research, Geojit Financial Services, said.

Technical analysis

"The formation of hammer type candle patterns on the weekly chart signals that any minor weakness from here could be a buying opportunity in the short term. Immediate support to be watched at 8950. A sustainable move above 9150-9180 is likely to lift Nifty towards 9500 levels in the short span of time," Nagaraj Shetti, Technical Research Analyst, HDFC Securities, said.

"The way the Index gave a downside movement during the trading session, it seems that we might see a further downside movement in the Index in upcoming trading sessions. At present level, the Index has strong support at 8950-8800 while upside resistance comes at 9350 level," Sumeet Bagadia, Executive Director, Choice Broking, said.

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