Market Wrap: Sensex, Nifty end lower; investors remain cautious ahead of RBI MPC

Domestic equities ended lower, extending losses into the second consecutive session, on June 6 as investors remained cautious ahead of the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) outcome on April 8.

The RBI MPC meet began on June 6 and a rate hike is widely expected. Bank of America (BofA) Securities expects the RBI MPC to hike the policy repo rate by 40 bps in June and 35 bps in August on the back of inflation persisting beyond 6 percent (the upper limit of RBI's tolerance band).

“Basically, the market has been exercising caution ahead of the credit policy announcement this week, and hence investors trimmed their position in rate-sensitive sectors such as realty," said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.

Elevated crude oil prices also kept the mood sombre. Oil prices hit $120 a barrel in trade on June 6 after Saudi Arabia raised crude prices for July and amid doubts that an increased OPEC+ monthly output target will help ease tight supply, reported news agency Reuters. The rupee ended flat at 77.63.

Sensex ended 94 points, or 0.17 percent, lower at 55,675.32 with 9 stocks in the green and 21 stocks in the red. Nifty50 closed 15 points, or 0.09 percent, lower at 16,569.55.

Shares of Tata Steel (up 0.99 percent), IndusInd Bank (up 0.78 percent), Mahindra & Mahindra (up 0.77 percent), ITC (up 0.70 percent) and Kotak Mahindra Bank (up 0.67 percent) ended as the top gainers in the Sensex index.

On the flip side, Asian Paints (down 2.36 percent), UltraTech Cement (down 1.68 percent), Bajaj Finserv (down 1.34 percent), Nestle (down 1.01 percent) and Larsen & toubro (down 0.79 percent) ended as the top laggards in the Sensex index.

In sync with the benchmarks, the BSE Midcap indedx slipped 0.15 percent while the Smallcap index fell 0.54 percent.

Among the sectoral indices, BSE Realty fell 0.87 percent while the Consumer Discretionary Goods & Services ended 0.79 percent lower. BSE Metal and Oil & Gas indices rose 0.72 percent and 0.50 percent, respectively.

"Domestic market moved in tandem with the global peers to open weak and gradually recovered its losses following a positive start in Europe. Oil prices rose after Saudi Arabia raised their selling price adding to the current global inflationary pressure. Better than expected US job data triggered worries on Wall Street as it gives the Fed more room to hike rates. This volatility is likely to continue in both global and domestic markets as investors await monetary policy decisions from major central banks including RBI," said Vinod Nair, Head of Research at Geojit Financial Services.

Technicals

Chouhan of Kotak Securities pointed out that Nifty found support near 16,450 but failed to capitalise on it.

"The texture of the chart is indicating that a range bound activity is likely to continue in the near future. For day traders, 16,500 would be the key support level to watch out for, and above which the index could move up to 16,650-16,750. On the flip side, a fresh round of selling pressure is possible if the index trades below 16,500. Any further decline could see the index retest the level of 16,400-16,350,” said Chouhan.

Mazhar Mohammad, Founder & Chief Market Strategist, Chartviewindia.in. observed that in the last four trading sessions, the index dipped into the bullish gap zone of 16,506 and 16,370, registered on May 30 thrice, and recovered with intraday lows present around 16,440.

"16,440 may be emerging as a critical short term support point and the breach of this on a closing basis can strengthen the bears with initial targets placed around 16,000. Therefore, the market should remain rangebound between 16,440 and 16,700 for quite some time before witnessing a breakout in either of the directions," said Mohammad.

Disclaimer: The views and recommendations made above are those of individual analysts and not of MintGenie.