Indian equity benchmarks Sensex and Nifty closed lower amid weak global cues Wednesday even though they recovered half of their intraday losses in late afternoon trade. The Sensex closed 135 points lower at 52,443 and the Nifty50 index slumped 37 points to end the day at 15,709. Broader markets underperformed the benchmarks as both mid-caps and small-caps slumped half a percent.
Among sectors, metal index added over 1% and IT index rose 0.2%, however, selling was seen in the auto, bank, energy and pharma sectors.
On the Nifty50 index, Bharti Airtel, Tata Steel, SBI Life, Divi’s Lab, and IndusInd Bank were the top gainers. Kotak Mahindra Bank, Cipla, Tata Motors, M&M, and Dr Reddy’s Labs were the top losers.
On the IPO front, the Rolex Rings issue was fully subscribed within the initial hours of opening. The issue is subscribed 2.18 times so far on Wednesday, the first day of bidding. The Glenmark Life Sciences IPO was subscribed 4.25 times so far on July 28 – the second day of bidding.
While both bulls and bears slug it out in the first half of the trading session, the former cut long positions and in the latter part of the trading session bears covered short-sell positions. However, based on the recovery of the market, we feel that Nifty has completed a corrective pattern at 15,500. Significant gains in telecom, metals, technology and select private banks helped the market to close above the levels of 15,700. On Thursday, Nifty could remain in the trading range of 15,800 and 15,600. As the market has re-entered the trading range, the levels of 15,600 would act as major support and 15,800 would be a major obstacle.
Nifty is showing tremendous resilience against the odds. The collapse in the Asian markets has not dented the confidence of investors. Nifty will continue to trade in a band for a prolonged period and when will the breakout manifest is anybody’s guess. Till the time breakout above 15,950 manifests Nifty could remain in a range for a prolonged period. We are in a well-established range that points out a simple strategy buy around 15,500 and sell around 15,950.
Nifty broke the 15,635 support but bounced back to close marginally in the negative for the day. The selling in the markets got arrested once the Hongkong and Chinese markets reversed their weak trend this morning showing signs of stability after three days of sharp weakness. Nifty can now stay in the 15,635-15,797 band for the next 1-2 sessions.
On the technical front, the Nifty index has been trading in higher high and lower low formation and tested the support from lower formation, suggesting a bounce back in the upcoming session. At present, the Nifty has support at 15,500 level while resistance comes at 15,850 levels.
