Benchmark equity indices ended lower after a five-day rally amid a highly volatile session on Wednesday. The share market was pulled down by losses in index heavyweights such as Reliance Industries, Infosys and TCS due to weak cues from global peers. After opening on a positive note, Sensex slipped 594.26 points from the day's high and finally settled 345.51 points, or 0.95 per cent, lower at 36,329.01. The Nifty also declined 93.90 points, or 0.87 per cent, to close at 10,705.75.
"Profit booking was witnessed today after Nifty gained nearly 5 per cent in the previous five trading sessions and Bank Nifty surged nearly 1200 points (6 per cent) in the last four days. Markets closed in red at the end of a volatile trading day as investors weighed the gradual resumption of business activity against a steady rise in new coronavirus cases. Moreover, there was caution ahead of the June quarterly earnings season starting on Thursday, global market weakness and high valuation," said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.
Here are 5 things to know before Thursday's opening bell
Tata Consultancy Services (TCS) will kick off the earnings season on Thursday by announcing its financial numbers for June quarter. The investors will track the earnings closely to plan their investment strategy going ahead.
"All eyes will be on Q1FY21 earnings of TCS, which is scheduled tomorrow, July 9. Traders should prefer hedged trades instead of outrights, citing a possible uptick in the volatility ahead," said Ajit Mishra, VP - Research, Religare Broking.
Mutual fund inflow
Inflow into equity mutual funds fell 95 per cent to a little over Rs 240 crore in June. It is the third straight monthly plunge in inflow in equity mutual funds, data by the Association of Mutual Funds in India (AMFI) showed on Wednesday. "There has been an overall slowdown in the equity inflows, but the Gross Inflows for the month were at over Rs 13,000 crore plus, whereas the jump in redemptions to also nearly Rs 13,000 crore plus is what is making the Net Inflow data look neutral. At least till last month SIP number was steady at Rs 8,000 crore plus and I would like to believe it would remain steady around that number, simply because it's very granular at nearly 3.2 crore SIP accounts, so discontinuing of few thousand SIPs will also not reduce the overall SIP inflow significantly," said Sachin Shah, Fund Manager, Emkay Investment Managers.
Bourses in Shanghai and Hong Kong ended with gains, while Tokyo and Seoul closed in the red. Stock exchanges in Europe too began on a negative note.
"The foreign institutional investors (FPI) activity in the coming weeks is something that needs to be watched closely as there are already reports of likely rebalancing of portfolios and resultant trimming of positions. It is also significant that the domestic markets, for most part of the week, reflected the broad trends in other global markets," said Joseph Thomas, Head of Research - Emkay Wealth Management.
According to traders, the domestic market followed volatility in global equities as a rising number of COVID-19 cases across the world stoked concerns over economic recovery. The number of cases around the world linked to the disease has crossed 1.17 crore and the death toll has topped 5.43 lakh. In India, the number of infections has spiked to 7.42 lakh, with 20,642 fatalities.
What analysts say
"The short term trend of Nifty seems to have reversed down from the swing high. One may expect further weakness in the short term. The intermediate trend of Nifty continues to be positive for the Nifty and weakness down to 10,550-10,500 could now be a buy on dips opportunity,"said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.
"Nifty could not sustain the gains after opening in positive territory and ended down with 93 points at 10,705. During the day, Nifty rose above 10,800 backed by good movement in large cap counters. At present level, Nifty support is seen at 10,550 while resistance comes at 10,850-10,900," said Sumeet Bagadia, Executive director, Choice Broking.