It turned out to be a disappointing week for the domestic equity market. Benchmark equity indices BSE Sensex and NSE Nifty lost over 1.50 per cent amid volatility during the truncated week. Market watchers believe that rising inflation woes coupled with the soft global market and subdued debut of India’s largest IPO Paytm on Thursday dampened sentiment.
The 30-share Sensex retreated 1,050.68 points to 59,636.01 on November 18 from 60,686.69 on November 12. Likewise, the 50-share Nifty index settled 337.95 points lower at 17,764.80 during the same period. Domestic equity markets were closed on November 19 on account of Gurunanak Jayanti.
As many as 42 stocks in the Nifty index closed the week in the red. With a fall of 8.12 per cent, Coal India emerged as the top loser in the list. It was followed by Tata Steel (down 7.82 per cent), Shree Cement (down 7.56 per cent), Hindalco (down 6.03 per cent), BPCL (down 5.24 per cent) and Reliance Industries (down 4.62 per cent).
Coal India declined after the company on November 12 reported a 0.38 per cent fall in consolidated net profit at Rs 2,936.91 crore on 8.25 per cent growth in total income at Rs 24,072.83 crore in Q2 FY22 over Q2 FY21.
On the other hand, Maruti Suzuki and Power Grid Corporation of India gained 8.52 per cent and 5.77 per cent, respectively. Asian Paints, ITC, Nestle India and SBI Life Insurance Company also gained between 0.50 per cent and 3.33 per cent.
Shrikant Chouhan, head of equity research (retail), Kotak Securities said, “Factors such as rising inflation numbers and higher valuations are weighing on investors' minds, resulting in a correction in key indices.”
India’s inflation based on the wholesale price index stood at 12.54 per cent in October 2021 compared with 1.31 per cent in October 2020.
Sectorwise, the BSE Metal index plunged the most by 5.84 per cent. BSE Realty, Oil & Gas, Telecom, Capital Goods, Bankex, Consumer Durables and TECk also declined between 1 per cent and 4 per cent. However, the BSE Auto, Power and Healthcare indices advanced 0.55 per cent, 0.14 per cent and 0.11 per cent, respectively.
Commenting on the auto sector, Yesha Shah, head of equity research, Samco Securities said the auto sector outperformed on hopes of normalisation and a potential turnaround.
“Few auto-makers in their management commentaries have indicated that the auto chip shortage has bottomed out and their future performance outlook seems better backed by unabated demand and an improving supply chain situation. While the optimism among the auto-makers seems reassuring, inflation may continue to pose margin pressure. Therefore, investors may tactically place their bets in this sector on companies with strong earnings and margin visibility along with resilient balance sheet.” Shah added.
On the weekly time frame, Nifty made a long red candle that has closed at the low of the week. Independent technical analyst Manish Shah said, “Nifty is now approaching the long term bullish trendline that is intact since the low of March 2020. The whereabouts of this trend line is around 17,600-17,640. The MACD has turned bearish after remaining in a bullish mode for more than 13 weeks.”
Shah further added that if Nifty breaks below this support zone then Nifty may decline towards 17,400-17,500.
Going ahead, the market may remain volatile next week as traders will roll over positions in the F&O segment from the near month November series to December series ahead of derivatives expiry on November 25.
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