scorecardresearchMarket Wrap: Sensex, Nifty end lower in volatile trade; realty index rises

Market Wrap: Sensex, Nifty end lower in volatile trade; realty index rises 2%

Updated: 09 Jun 2022, 09:22 AM IST
TL;DR.

  • A rise in crude oil prices further added pressure. Brent Crude traded above the $120 a barrel mark while the rupee slipped 3 paise to close at 77.74 per dollar mark.

Sensex ended 215 points, or 0.39 percent, lower at 54,892.49 while the Nifty closed the day at 16,356.25, down 60 points or 0.37 percent. Photo: Pixabay

Sensex ended 215 points, or 0.39 percent, lower at 54,892.49 while the Nifty closed the day at 16,356.25, down 60 points or 0.37 percent. Photo: Pixabay

Domestic equities ended in the red after volatile trade as investors digested the 50 bps hike in repo rates and shifted their focus to the next week's US FOMC outcome.

After opening in the green, the equity benchmark the Sensex slipped into the red briefly and then rose more than 300 points after the RBI Governor announced a 50 bps rate hike to bring inflation down.

However, the market failed to hold gains as investors took money off the table while shifting their focus to the next week's Fed policy outcome. The fresh flare up in the Ukraine war also weighed on the sentiment.

As reported by Reuters, Ukrainian troops holding out in the ruins of Sievierodonetsk came under renewed heavy assault on Wednesday from Russian forces who see the capture of the industrial city as key to control of the surrounding Luhansk region.

A rise in crude oil prices further added pressure. Brent Crude traded above the $120 a barrel mark while the rupee slipped 3 paise to close at 77.74 per dollar mark.

Sensex ended 215 points, or 0.39 percent, lower at 54,892.49 while the Nifty closed the day at 16,356.25, down 60 points or 0.37 percent.

BSE Midcap index slipped 0.15 percent while the Smallcap index fell 0.33 percent. Among the sectoral indices, BSE Realty rose 1.88 percent while most of them ended in the red. BSE Telecom index fell 1.62 percent.

"RBI turned realistic by withdrawing their accommodative stance, realising the need for front-loaded action and increased inflation forecast by 100 bps to 6.7 percent. On the bright side, there were some positive points like no increase in CRR, economic growth was maintained healthy at 7.2 percent and no additional measures were announced to reduce the liquidity of the banking system. However, the focus shifted to the global market, which is anticipating a hawkish Fed policy, slated for next week," said Vinod Nair, Head of Research at Geojit Financial Services.

The persisting concerns over inflation, rate hikes, slowing economies and the Ukraine war seem to have refused to fade away.

The Ukraine war has posed a serious question to the global economic growth as rating agencies and leading economists believe the global growth will miss the expectations in FY23.

As per a Reuters report, the OECD (Organisation for Economic Cooperation and Development) on June 8 said the war in Ukraine has made the growth outlook far bleaker even though the global economy should avoid a bout of 1970s-style stagflation.

The world economy is set to grow 3 percent this year, much less than the 4.5 percent expected when the OECD last updated its forecasts in December.

Technicals

Mazhar Mohammad, Founder & Chief Market Strategist, Chartviewindia.in pointed out that the Nifty closed below critical short term support of 16,400, hinting that the bears are slowly strengthening their grip over the index.

"Unless Nifty50 registers a close above 16,500 in the near term, the trajectory of the market shall remain down and correction may get further accelerated on a close below its 20-day simple moving average (SMA) whose value is placed around 16,250. Therefore, for the time being, it is better to avoid long side index bets," said Mohammad.

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities highlighted that the Nifty formed a bearish candle on daily charts which suggests the continuation of weakness in the near future. In addition, a late afternoon sell-off from the day's highest level also indicates further weakness from the current levels.

"If the index closes below the level of 16,275, it could retreat further up to 16,200-16,150. Similarly, 16,500 would act as an immediate hurdle for the market and above the same, it would retest the level of 16,600-16,635," said Chouhan.

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

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First Published: 08 Jun 2022, 04:36 PM IST