Sensex, Nifty tumble after reaching fresh highs, end deep in red; are bears returning to D-Street? 

After having hit fresh all-time highs on Wednesday morning, Sensex and Nifty saw a sharp sell-off as stock markets closed deep in red. Sensex and Nifty tanked 1.5% each during the day’s trade. Only three of the 30 Sensex constituents closed with gains. ONGC gained 6.25% while Power Grid and IndusInd Bank were up less than half a percent. Axis Bank and Kotak Mahindra Bank were the top drags. India VIX shot up 9.94% to end above 23 levels. Broader markets mirrored the sharp fall.

Vinod Nair, Head of Research at Geojit Financial services –

“The market rally which was led by developments on vaccine and FPI inflows came to a halt today due to profit booking across sectors in the second half of the trading session. We can expect profit booking to continue in our domestic market, in the short-term, as the liquidity driven rally can take a pause having reached all-time high on a monthly basis. This money was triggered by the overwhelming result of the US election unleashing high amounts of funds which was put on-hold. FIIs can take a breather and check for the next phase of policies in the US and Europe for 2021.”

Sahaj Agrawal, Head of Research- Derivatives at Kotak Securities –

“Broader markets outperformed in the previous week as Midcap indices trade with gains while Nifty and Bank Nifty trade rather flattish. Significant volatility was seen and is expected to remain elevated going ahead as well. Immediate range for the index is seen at 12600-13200 with a positive bias; Buying on dips is advisable. Auto and FMCG remain preferred picks while Metals and Banking expected to remain under pressure.”

S Hariharan, Head – Sales Trading, Emkay Global –

“Markets are currently being driven a macro shift of assets into equities globally, and furthermore, EM equities over DM, as prospects of a macro recovery in APAC and potential growth upsides driven by vaccine availability have taken root – in the meanwhile, the second wave spread of covid-19 in EU & US is leading to low expectations of economic activity in the last quarter of CY20 among DMs. Since Nifty is already at lifetime highs, we expect market strength to become more broad-based now, with under-owned sectors like Metals and PSUs catching up on performance, and Mid-caps out-performing Large-caps in the short-term.

A broader opening up of the economy will be set-off against continued lower levels of formal employment and hence, Consumer staples can be expected to post muted levels of volume growth, while Financials also appear fairly weighted at current levels. OMCs and plays for a revival in the CV demand cycle would benefit in the coming quarter.”

Ajit Mishra, VP – Research, Religare Broking –

“Markets drifted lower and lost over one and a half percent, taking a breather after the recent surge. Participants were in the profit-taking mood from the beginning, citing overbought markets and a cautious approach ahead of derivatives expiry. It’s normal to see an intermediate dip in a trend and we may see further profit-taking ahead. Besides, volatility is also likely to remain high due to scheduled derivatives expiry. Nifty has the next crucial support at 12,700. Considering the scenario, we suggest limiting naked leveraged trades and preferring hedged positions.”

Keshav Lahoti, Associate Equity Analyst, Angel Broking –

“Indian market opened in green but due to profit booking closed at close to day’s low by correcting by 1.5%. In line with our expectation, profit booking was across all the sectors. Global cues were neutral, Dow Futures and Nasdaq Futures were flat, whereas FTSE was down by 0.4%. Sector wise, we are more bullish on IT, Pharma and Chemical stocks due to the structural positive change brought in the sector due to Covid-19. We advise investors to have ~15-20% in cash so that they can utilize the cash when correction happens in the market. From these levels, unlike the last few days, we don’t expect a sharp rally in the market.”

Sumeet Bagadia Executive Director Choice Broking –

“After hitting an all-time high of 13145.85 levels, Nifty wiped out its early gains and slipped almost 196.25 points to close at 12858.90 levels, due to profit booking in frontline defensive stocks, IT and Pharma sector. However, on the other side, PSU banking stocks like Punjab National Bank & Bank of Baroda held the gains for the day. On the technical front, the benchmark index has formed Bearish Engulfing Candlestick pattern on the daily chart, which could be a sign of trend reversal. Moreover, a momentum indicator RSI (14) also turned down from the overbought zone, which indicates bearish move for near term. At present, Nifty has an immediate support around 12730 levels, while upside resistance comes at 13146 levels.”