Key equity indices the Sensex and the Nifty closed in the green for the sixth consecutive session on August 3 due to fag-end buying even as broader markets remained in the red as sentiment turned cautious over concerns that the US-China relationship may hit rough weather over the Taiwan issue.
Comments from some US Fed officials on the rate hikes also weighed on sentiment. As reported by Reuters, “a trio of Federal Reserve officials signalled on August 2 that they and their colleagues remain resolute and completely united on getting US interest rates up to a level that will more significantly curb economic activity and put a dent in the highest inflation since the 1980s.”
On the geopolitical front, US House of Representatives Speaker Nancy Pelosi left Taiwan on August 3 but her brief visit upset China to the extent that it summoned the US ambassador to Beijing and demonstrated military activities in the sea surrounding Taiwan. As per a New York Times report, China’s military has said it will conduct a series of live-fire drills beginning on Thursday.
However, many market analysts believe that China may not want to escalate the geopolitical tension and will keep its military exercise to the demonstrative level only.
Sensex opened slightly higher at 58,174.11 against the previous close of 58,136.36 and fell as much as 348 points in intraday low to 57,788.78.
However, bargain hunting, in light of positive global cues, helped the benchmark rise 214 points, or 0.37%, to end at 58,350.53. Nifty closed the day 43 points, or 0.25%, higher at 17,388.15.
Gains in shares of select heavyweights, including Infosys, Reliance Industries, ICICI Bank, TCS and HDFC twins helped the benchmark stay in the green.
In the 30-share pack Sensex, 18 ended in the green while the rest 12 settled in the red. Shares of Maruti, Sun Pharma, Kotak Mahindra Bank, IndusInd Bank and Bajaj Finance ended as the top laggards.
Mid and smallcaps underperformed today, as the BSE Midcap index fell 0.60% while the smallcap index fell 0.28%.
Most sectoral indices ended in the red today, with BSE Telecom (down 1.26%), Capital Goods (down 0.82%) and Auto (down 0.78%) falling up to a percent. BSE IT (up 1.28%) and Teck (up 1.13%) bucked the trend and logged healthy gains.
Brent Crude traded below the $100 a barrel mark while the rupee fell 45 paise to close at 79.16 per dollar. The rupee fell after four days of gains because of the high trade deficit while caution ahead of the RBI MPC outcome also weighed on the domestic unit.
"Amidst the geopolitical storm affecting the global markets, the domestic market moved in line with its global peers. The global market is also concerned about recessionary risk. On the domestic front, the major trigger this week will be the RBI’s policy meeting outcome, where the market is largely expecting a 25-50bps rate hike," said Vinod Nair, Head of Research at Geojit Financial Services.
The RBI MPC meet is underway and the outcome is due on August 5.
Ajit Mishra, VP - Research, Religare Broking expects Nifty to consolidate further citing mixed indications and it is healthy after the recent surge. “Participants should maintain their focus on identifying stock-specific opportunities and utilizing any dip to accumulate. At the same time, we recommend keeping a check on leveraged positions and preferring a hedged approach,” said Mishra.
Technicals
Nifty remained mostly sideways for the day as the index remained within the bands of 17,200 and 17,400.
Rupak De, Senior Technical Analyst at LKP Securities pointed out that on the higher end, 17,400 has been acting as crucial resistance for the last two days. Going ahead, a decisive move above 17,400 may induce a further rally in the market. Failure to move above 17,400 may attract selling pressure in the market. Support on the lower end is visible at 17,200/17,000, said De.
Technically, the immediate support for Nifty is seen at 17,121 and below the same, expect Nifty to quickly slip towards the 16,750-16,800 zone, said Prashanth Tapse, Research Analyst, Senior VP (Research), Mehta Equities.
Alternatively, if Nifty’s support at 17,121 holds, then expect the benchmark to shoot to the moon with targets at 17,557 and then at the 18,100 mark, Tapse added.
Disclaimer: The views and recommendations made above are those of individual analysts and not of MintGenie.
