After clocking a healthy gain in the previous session, frontline indices the Sensex and the Nifty resumed their downward march on December 20 amid weak global cues.
Most Asian markets fell sharply on December 20 after the Bank of Japan tweaked its bond yield controls, which will allow long-term interest rates to rise further.
"The Bank of Japan shocked markets on Tuesday with a surprise tweak to its bond yield control that allows long-term interest rates to rise more, a move aimed at easing some of the costs of prolonged monetary stimulus," reported Reuters.
Oil prices inched higher after the dollar eased and reports emerged that the US was planning to restock petroleum reserves. Brent Crude traded over a percent higher near the $80 per barrel mark.
Meanwhile, the rupee ended 5 paise lower at 82.75 per dollar.
Sensex opened 197 points lower at 61,608.85 and fell 704 points to hit an intraday low of 61,102.68.
The index, however, pared most losses and ended 104 points, or 0.17 percent, lower at 61,702.29 while the Nifty closed at 18,385.30, down 35 points, or 0.19 percent.
Midcaps underperformed as the BSE Midcap index fell 0.27 percent. On the other hand, smallcaps outperformed as the BSE Smallcap index slipped just 0.02 percent.
Even though the market ended lower, as many as 133 stocks, including Axis Bank, Adani Enterprises, JK Paper, IIFL Finance, PNB Housing Finance and Suzlon Energy, hit their 52-week highs in intraday trade on BSE on December 20.
Top Sensex gainers: TCS, Reliance Industries and UltraTech Cement ended as the top gainers in the Sensex index.
Top Sensex losers: Tata Motors, Hindustan Unilever and Mahindra and Mahindra ended as the top laggards in the Sensex kitty of stocks.
Barring Nifty Oil & Gas (up 0.24 percent), Nifty IT (up 0.20 percent) and Nifty Metal (up 0.12 percent), all sectoral indices ended in the red.
With a loss of 1.21 percent, Nifty Realty ended as the top loser among the sectoral indices, followed by Nifty Media (down 0.81 percent) and Nifty Auto (down 0.77 percent).
Experts' views on markets
Vinod Nair, Head of Research at Geojit Financial Services highlighted that the Bank of Japan shocked global markets in a totally unexpected move by raising the upper band limit for the 10-year yield to 50 bps, which is seen as a step towards a hawkish policy shift.
"This has aggravated the selloff in the global market, which was already risk-averse due to mounting recessionary fears following the Fed's comment. The US GDP numbers expected on December 22 will provide a picture of the strength of the US economy," said Nair.
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities said the choppy trend of the market can be attributed to a lack of fresh positive triggers. Also, investors are awaiting the release of the minutes of the RBI's recently concluded monetary policy on December 21, which could give some clarity on the central bank's likely course of action in the near term.
Technical views by experts
Chouhan pointed out that the market is witnessing a non-directional activity and perhaps traders are waiting for either side breakout.
"For bulls, 18,450 would be the important breakout level to watch. And if the market trades above the same, we can expect a quick uptrend rally towards 18,550-18,600. On the flip side, trading below 18,200 may increase further weakness up to 18,100-18,050," said Chouhan.
Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas pointed out that multiple technical parameters offered support on the downside near 18,200. The index got support from the junction of the 40 DEMA and the daily lower Bollinger.
Also, the selling pressure was absorbed near the lower end of a downward-sloping channel drawn from the high of 18,887. Thereon, the Nifty saw a sharp recovery, which is likely to continue going ahead.
"The Nifty is expected to test the upper channel line near 18,600. On the downside, 18,200 will continue to pose as a crucial support," said Ratnaparkhi.
Key market data
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of MintGenie.