scorecardresearchMarket Wrap: Sensex, Nifty fall about a percent each ahead of key macro

Market Wrap: Sensex, Nifty fall about a percent each ahead of key macro data

Updated: 12 Jul 2022, 04:11 PM IST
TL;DR.

  • India's industrial production and manufacturing output data for May and retail (CPI) inflation for June will be released later today (July 12) which will not only tell the state of the economy but also hint at how the RBI may proceed with the rate hikes.

FILE PHOTO: Sensex ended 509 points, or 0.94 percent, lower at 53,886.61 while the Nifty50 closed the day with a loss of 158 points, or 0.97 percent, at 16,058.30. REUTERS/Francis Mascarenhas

FILE PHOTO: Sensex ended 509 points, or 0.94 percent, lower at 53,886.61 while the Nifty50 closed the day with a loss of 158 points, or 0.97 percent, at 16,058.30. REUTERS/Francis Mascarenhas

Frontline indices the Sensex and the Nifty ended in negative territory for the second consecutive session on July 12 as investors sold off equities ahead of the release of key macroeconomic numbers.

India's industrial production and manufacturing output data for May and retail (CPI) inflation for June will be released later today (July 12) which will not only tell the state of the economy but also hint at how the RBI may proceed with the rate hikes.

Besides, investors also await US retail inflation for June which will be released on Wednesday, July 13.

"Rate hike fears are back in focus in the global markets ahead of the release of CPI numbers. Inflationary pressures along with strong US jobs data would keep the Fed on the path of aggressive rate hikes," said Vinod Nair, Head of Research at Geojit Financial Services.

"On the domestic inflation front, retail inflation for the month of June is expected to be at 7.03 percent, maintaining the previous month’s levels. Demand concerns amid the rebound of virus cases in China compelled crude to trade lower," said Nair.

Global cues were also weak as European stocks traded lower as the euro hovered close to parity with the dollar, while investors remained cautious ahead of the US inflation prints on Wednesday.

Chinese stocks also fell amid concerns over Covid restrictions and fresh regulatory moves against big tech companies.

As Deepak Jasani, Head of Retail Research, HDFC Securities pointed out, China’s tech stocks unwound recent gains to enter a technical correction on Tuesday, with analysts questioning if fresh probes on internet giants would spark another downturn in the sector.

Sensex ended 509 points, or 0.94 percent, lower at 53,886.61 while the Nifty50 closed the day with a loss of 158 points, or 0.97 percent, at 16,058.30.

Mid and smallcaps also suffered losses but the still outperformed the benchmarks. BSE Midcap index closed 0.51 percent lower while the Smallcap index fell 0.52 percent.

Among the sectoral indices, BSE IT, Teck, Metal, Auto and FMCG fell more than a percent each while Telecom, Utilities and Power indices rose more than a percent each.

In the 30-share pack Sensex, only three stocks - NTPC (up 1.87 percent), Bharti Airtel (up 0.18 percent) and Bajaj Finance (up 0.18 percent) - ended in the green.

Shares of Infosys (down 2.33 percent), Nestle (down 1.87 percent) and Power Grid (down 1.66 percent) ended as the top laggards in the Sensex index.

Crude oil prices eased as the Brent Crude traded below the $105 a barrel mark while the rupee ended nearly 17 paise lower to end at 79.60 per dollar.

Technicals

Talking about technicals, Rupak De, Senior Technical Analyst at LKP Securities said that the Nifty slipped below the previous session's low and formed a small-bodied candle just below an important moving average.

"On the lower end, 16,000 is likely to act as crucial support. On the higher end, resistance is visible at 16,200, where meaningful call writing has happened," said De.

Mazhar Mohammad, Founder & Chief Market Strategist, Chartviewindia.in observed that the candles formed in the last three trading sessions appear to be paving the way for the weakness which can be aggravated further if the index closes below 16,000.

Apart from this, momentum oscillators generated a sell signal further strengthening the case for a weak sentiment for the next couple of trading sessions. Hence, in case, if the index closes below 16,000 then the downswing shall initially extend towards 15,765 where its 20-day SMA is present, said Mohammad.

At this juncture, the only solace for bulls is coming from the daily MACD which generated a buy signal as the MACD value turned positive with a close above its equilibrium line. Therefore, if the index manages to defend 16,000, then a sideways move between 16,000 and 16,275 cannot be ruled out. For the time short-term traders are advised to avoid long side bets but shorting can be considered below 16,000, Mohammad added.

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

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First Published: 12 Jul 2022, 04:11 PM IST