Dear Trader –
Sensex ended the day
379 points weaker at 71,892 while Nifty ended at 21,754. Small and midcaps were
relatively less affected. Nifty Bank ended 1% weaker while Nifty Auto fell
1.37% on weaker than expected December sales numbers. Nifty IT and Realty also
fell over 1% each. Nifty Pharma was the top gainer in sectoral churning as it
rallied around 2.5%.
Here are key factors
behind Sensex fall today: –
1) Profit booking at peak levels – Nifty, which hit a fresh record high of
21,834.35 in Monday’s session, saw a sell-off in the last 30 minutes of
yesterday’s trading session, signifying the market can be vulnerable at peaks
due to profit booking.
2) Valuation worries – While the valuations of Sensex and Nifty
are not yet in the danger zone, investors have been raising concerns about the
possibility of euphoria building up in pockets of the market, particularly in
smaller stocks.
3) Derivative factor – Whenever there is a decrease in the FII
long short ratio supported by PCR bearish divergence, Nifty tends to correct.The
first time this happened was on July 19 and 20 when Nifty made a top of 19,992
and corrected 3.85%. The second time it happened was on September 14 and Nifty
made a top of 20,222 on September 15 and corrected 6.84%. Nifty has given the
same signal again on January 1.
4) Auto effect – December month sales data shows that auto
OEMs’ volumes grew on a YoY basis across segments, barring CVs and tractors,
with the 2W segment leading the growth, while PV volume displayed moderate
growth.With the numbers turning out to be below expectations, the Nifty
Auto index fell 1.4% with Eicher Motors and Ashok Leyland leading the fall with
a loss of around 3% each.
5) Red Sea worries –Investors were closely tracking tensions in
the Middle east after Iran dispatched a warship to the Red Sea as the US Navy
destroyed three Houthi boats. Brent crude climbed above $78 a barrel after
declining by 5% over the prior three sessions, with West Texas Intermediate
near $73. The US Navy said it was fired upon when responding to a distress call
from a vessel in the Red Sea, resulting in the sinking of the three boats. In
response, Iran’s Alborz destroyer entered the vital waterway on Monday.
6) Weak earnings outlook from IT – Traders have begun to gear their portfolios
towards the upcoming Q3 earnings season which begins next week with TCS and
Infosys leading the show on January 11.
During 3QFY24, we expect aggregate revenue
growth for our coverage universe to remain muted at 0.8% QoQcc, given the
seasonal impact of furloughs, which are deeper this year.
7) January effect – In the last 12 years, Nifty 50 has given
negative returns in 7 instances in January. In fact, it has given negative
returns for 5 years in a row between 2019 and 2023.
Nifty futures opened at 21820.00 points against the previous close
of 21888.90 and opened at a low of 21674.00 points. Nifty Future closed with an
average movement of 195.95 points and decline of around 134.90 and 21754.00 points…!!
At the start of intra-day trading December gold opened at Rs.63329
fell from a high of Rs.63653 points to a low of Rs.63329 with a rise of 41 points,a
trend of around Rs.63361 and December Silver opened at Rs.74545, fell from a
high of Rs.75000 points to a low of Rs.74476 with a rise of 195 points, a trend
of around Rs.74585.
Technically,
the important key resistances are placed in October Nifty future are at 21754 levels,
which could offer for the market on the higher side. Sustainability above this
zone would signal opens the door for a directional up
move with immediate resistances seen at 21808 – 21909 levels. Immediate support
is placed at 21606 – 21404 levels.
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