After a gap up opening today, Indian benchmark equity indices witnessed profit booking in the second half on Jan 06. Nifty opened at a record high but fell later. A sharper fall came in post 13.30 Hrs. A feeble recovery post 14.10 Hrs followed and hence the markets did not close at their intraday lows. At close the Nifty was down 53 points or 0.4% at 14146.
Volumes on the NSE were the highest since Nov 27. Among sectors, Metals, Realty and Cement gained the most while IT and FMCG fell the most. Broader market indices – smallcap and midcap indices outperformed the Nifty. Asian shares were mostly lower Wednesday as swelling virus counts, Hongkong crackdown and China-U.S. tensions weighed on sentiment.
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European stocks were steady early on Wednesday but U.S. stock futures slipped as investors closely monitored the Georgia elections, in which the Democrats moved closer to a Senate majority. The Associated Press called one of the two seats for Democrat Raphael Warnock early on Wednesday morning. AP also projected a slim lead for Democratic challenger Jon Ossoff over Republican Sen. David Perdue. With a potential Democrat majority raising the prospect of further stimulus, the U.S. 10-year Treasury yield climbed above 1% for the first time since March, while the dollar fell.
Meanwhile, IHS Markit’s survey showed economic activity in the euro zone contracted more sharply than thought at the end of 2020 and could get worse as renewed lockdowns hit the bloc’s dominant service industry. A gauge of India’s services sector eased for the second straight month but remained in the expansion zone.
The Nifty has corrected after 10 days of rise. However the fact that it did not close at its intraday low is a consolation. The outcome of the US elections could have an impact on the US markets and then on Indian markets. As long as the 13985 level on the Nifty is not breached, this remains a buy-on-dips market.
After showing consistent upmove over the last ten sessions, Nifty halted its upside momentum on Wednesday and shifted into a profit booking mode amidst a volatility and closed the day lower by 53 points. After opening on a slightly positive note on Wednesday, the market has shifted into a range move with weak bias in the early to mid part of the session. The weakness intensified in the mid part on the volatile global cues and Nifty shifted into a firm upside recovery in the mid to later part of the session. The overall market breadth was slightly down and the broad market indices like NSE midcap 100 has closed higher by 0.55% and small cap 100 closed on a flat note.
The underlying short term uptrend remains intact and we are likely to see buying emerging in the coming sessions. Important lower supports to be watched at 13970 and the next upside resistance is at 14310.
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