Taking Stock: Markets end flat after hitting new highs, PSU banks take a knock

Indian equity benchmarks ended flat on February 23 after hitting new highs in the early trade as banking stocks bled and investors turned cautious ahead of the release of the GDP numbers along with other data.

The 30-pack Sensex, which climbed a new peak of 73,394.44, gave up the gains to close 0.02 percent lower at 73,142.80. The broad-based Nifty, too, ended 0.02 percent down at 22,212.70 after touching a new high of 22,297.50.

Investors avoided taking long positions ahead of GPD data, fiscal deficit numbers for January and eight infrastructure industries data to be released on February 29.

A Bloomberg poll pegs the GDP at 6.8 percent for the third quarter.

Top Nifty gainers included Bajaj Finserv, up 1.5 percent, followed by SBI Life and HDFC Life, advancing 1.4 percent and 1.1 percent.

The biggest losers were Bharat Petroleum Corp Ltd, HCL Technologies and Maruti Suzuki India Ltd.

Among sectoral indices, Nifty media led with a 1.2 percent gain followed by Nifty Realty and Nifty Consumer Durables, up 1 percent and 0.6 percent.

The Nifty PSU Bank index closed 1.1 percent, followed by Nifty IT, Nifty Bank, and Nifty Metals, all down 0.2 percent each.

Banking stocks weakened after global brokerage firm Goldman Sachs downgraded ratings on multiple banks, signalling the end of a Goldilocks period characterised by robust growth and visible profitability in the financial sector.

Goldman Sachs cited escalating headwinds in the Indian financial services sector, including mounting pressure on the cost of funds, rising consumer leverage, and structural funding issues.

Rupak De, Senior Technical Analyst, LKP Securities, said, the sentiment remains positive for the short term as the Nifty managed to close above the crucial resistance of 22,200, with the next resistance at 22,400. The short-term support is at 21,900.

Outlook for February 26

Vinod Nair, Head of Research, Geojit Financial Services

The domestic market paused momentarily after reaching another record high earlier in the day, driven by positive signals from global markets.

As the earnings season winds down, the market is eagerly awaiting new catalysts while relying on the pre-election momentum.

Concerns over rising crude oil prices, surging US bond yields and stretched valuations, likely prompting continued selling by FIIs.

Outlook for February 26

Ajit Mishra, SVP – Technical Research, Religare Broking

Indications are that the uptrend will continue. Traders should use intermediate dips to add quality stocks. They should also maintain a close watch on global indices, especially the US, and the participation of the banking majors for cues on momentum.

Kunal Shah, Senior Technical & Derivative Analyst, LKP Securities

Bank Nifty index maintained its robust momentum, breaking past the 46,500 level, which is now established as a formidable support. Any retracement towards this support zone presents an ideal opportunity to initiate long positions, targeting an upside of 48,000.

The immediate hurdle for the index is at 47,100, and a conclusive break above this level will signify a resumption of the uptrend towards 48,000.

Shrikant Chouhan, Head Equity Research, Kotak Securities

Indian equity markets were buoyant this week, with the Nifty index touching a new high.

The Sensex and the Nifty gained a percent each in the week.

The BSE Smallcap index also ended the week with positive returns. BSE Realty index posted healthy gains, followed by BSE FMCG index. On the other side, BSE IT, BSE Oil & Gas and BSE Energy index reported negative weekly returns.

With Q3FY24 results season behind us, the market focus will be on the macro developments – both domestic and international.

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