Shrewd: Investors post profits after nine straight session streak, Sensex plunges 100 points

NEW DELHI: After a massive rally, investors took profits in metal stocks while auto and banking names also dragged benchmarks on Tuesday amid weak and uncertain global indices.

The volatility indicator also rose slightly, reflecting the nervousness of the street. Valuations have also stretched now, but analysts are expecting better results for the December quarter, which should calm it down a bit. Tuesday’s losses were checked by a steady flow of foreign funds.

“Franic buying by FIIs is supporting the market even at high valuation levels. An unhealthy trend in recent days has been the rally in poor quality stocks. fundamentals. This is a risky game with the potential for huge losses,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.

“There is safety in quality large-cap stocks in the IT, pharmaceuticals, private banking, consumer goods and some automotive sectors. Quality stocks will rebound even in a sharp correction. But low quality stocks will become illiquid leading to huge losses. Retail investors should exercise caution.

Factors determining the markets

  • Elections in Georgia: Georgia’s runoff election will decide which party will control the US Senate. A victory for Democrats would make it easier for President-elect Joe Biden to push policies such as rewriting the tax code to spur the stimulus.
  • The US Fed will adopt an accommodating policy: Minutes of the US Federal Reserve’s latest policy meeting are due on Wednesday. Monetary policy will remain accommodative for “some time,” Cleveland Fed Chair Loretta Mester said Monday.
  • Lockdown in the UK: British Prime Minister Boris Johnson ordered England into a new national lockdown on Monday to contain a rise in COVID-19 cases.
  • Fast Lane Economic Activity: US manufacturing activity resumed its fastest pace in more than six years in December, extending the recovery in the manufacturing sector.

How are the bluechips doing

After opening in the red, the benchmarks rallied a bit but still traded lower. At 9:50 a.m., ESB flagship Sensex was up 103 points or 0.21% at 48,074. Benchmark NSE Nifty followed and slipped 41 points or 0.29% at 14,091.

“We are top heavy right now. 14,150 is the current resistance level and if we can break above that 14,200-14,250 is a possibility. However, it is recommended to maintain a conservative stance and trade with lighter amounts on the buy side with strict stops. Risk reward is currently skewed and we should wait for dips or corrections and then assess the markets. The accumulation of long positions should ideally occur during corrections,” said Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments.

In the pack of 50 Nifty shares, Axis Bank was the biggest gainer, up 2.29%. HDFC, HDFC Life Insurance, TCS, Hero Motocorp, Eicher Motors, HUL and Wipro were among the other winners.

Tata Motors was the big loser of the pack, down 2.54%. ONGC, Hindalco, M&M, JSW Steel, NTOC, Coal India, Indian Oil, ICICI Bank and Bharat Petroleum were the other losers in the pack.

Larger markets

Broader market indices traded with declines in line trading with their major counterparts in morning trading. Nifty Smallcap fell 0.10% while Nifty Midcap slipped 0.20%. The broadest index on NSE, Nifty 500, fell 0.20%.

Mahanagar Gas, L&T Tech Services, Mphasis, Rail Vikas Nigam, Tata Elxsi and Cyient were among the top space gainers while Alok Industries, Rail Industries, Sterlite Tech, Chola Finance and Apollo Tires were under selling pressure .

Global Markets

MSCI’s broadest index of Asia-Pacific stocks outside Japan fell 0.34%, down from a record high set in the previous session. Australian shares fell 0.44%. Chinese stocks erased early losses and rose 0.26%.

Japanese stocks fell 0.25% after a media report that the government will limit business hours in Tokyo and surrounding cities from Thursday. US S&P 500 stock futures edged up 0.24%.