The domestic market remained in negative territory for the second consecutive session on November 18 as investors remained cautious after US Federal Reserve officials hinted interest rate hikes would continue while the inverted bond yield curve stoked fears of a recession in the US.
US two-year yields increased to 4.48 percent which left them 69 basis points above 10-year yields, the largest inversion since 1981 and an indicator of an impending recession, reported Reuters.
Besides, the dollar and bond yields rose after St. Louis Fed President James Bullard said interest rates might need to hit a range from 5-5.25 percent from the current level of just below 4 percent to be "sufficiently restrictive" to curb inflation, the Reuters' report added.
Sensex settled 87 points, or 0.14 percent lower at 61,663.48 while the Nifty closed the day at 18,307.65, down 36 points, or 0.20 percent. The BSE Midcap index fell 0.44 percent while the Smallcap index settled 0.45 percent lower.
Shares of Hindustan Unilever, Asian Paints and HCL Tech ended as the top gainers while those of Mahindra & Mahindra, Maruti and Bajaj Finance ended as the top laggards in the Sensex index.
Among the sectoral indices, the BSE Auto index fell more than a percent while Energy, Oil & Gas and Consumer Discretionary fell up to a percent.
"Domestic market is now focusing on global trend for future direction due to lack of domestic triggers. Negative vibes in the developed markets and aggressive comments from Fed officials have shaken the ongoing optimistic trend across the globe," said Vinod Nair, Head of Research at Geojit Financial Services.
For the week, the Sensex and the Nifty slipped 0.2 percent each. The BSE Midcap index fell 1.30 percent while the Smallcap index retreated 0.81 percent on a weekly basis.
"Markets are indicating the prevailing consolidation to continue and Nifty should decisively cross 18,450 levels to regain strength. Meanwhile, we reiterate our view to focus more on sector/stock selection citing restricted participation. Besides, we’re observing breakout failures across sectors so maintain strict risk management rules also in place," said Ajit Mishra, VP - Research, Religare Broking.
Technical view by experts
As per Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities, the medium-term index formation is still on the positive side. Hence, buying on short-term corrections and selling on rallies would be the ideal strategy for traders.
"18,200 would act as a key support zone on the flip side 18,400 and 18,550 could be the important hurdles. Below 18,100, the uptrend would be vulnerable," said Athawale.
Prashanth Tapse - Research Analyst, Senior VP (Research), Mehta Equities pointed out that the Nifty traded with negative bias but the positive takeaway was that bulls regrouped at lower levels on backdrops of improving Asian and European stock markets – but still, the line in the sand at Nifty’s support at 18,151 mark.
"As long as Nifty's 18,151 support is held, Nifty’s immediate goal post is seen at its all-time-high at 18,605 mark and then targets at psychological 19,000 mark," said Tapse.
Key market data
Crude oil prices remained subdued; Brent Crude traded below the $90 per barrel mark. The rupee slipped 4 paise to close at 81.69 per dollar.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of MintGenie.