Broader indices underperform; 29 smallcaps witness double digit fall

Market witnessed volatility but ended on positive note in the week ended February 17 led by FII buying, while investors remain concerned over further rate hike by global central banks post mixed set of macroeconomic data.

In this week, BSE Sensex added 319.87 points or 0.52 percent to close at 61,002.57, while Nifty50 shed 87.7 points or 0.49 percent to end at 17,944.2.

However, broader indices underperform the main indices with BSE Small and Mid-Cap indices fell 0.5 percent each, while Large-cap index ended on flat note.

“Dominated by the release of key macroeconomic numbers and persistent FII buying, domestic markets witnessed a positive trend during the week. However, the unfavourable combination of higher-than-expected inflation and a stronger job market in the US market dragged markets lower towards the end of the week, raising concerns about tighter monetary policy,” said Vinod Nair, Head of Research at Geojit Financial Services.

“The whammy over India’s retail inflation breaching the RBI’s tolerance level was cooled by WPI inflation easing to 4.73% in January. The US inflation rate, though it slowed its pace compared to the previous month, came in higher than expected at 6.4% YoY.”

“Oil prices fell during the week as the US announced the release of more crude from its Strategic Petroleum Reserve (SPR), lifting supply concerns. A lack of major triggers in the domestic market will attract global cues to dictate the market’s trend going forward,” he added.

Among sectors, BSE Power index fell 3 percent, Realty index down 2.8 percent, Bank Index down 1 percent. However, BSE Metal index rose 2 percent, while Capital Goods and Energy indices added 1 percent each.

The BSE Small-cap index shed 0.7 percent dragged by EKI Energy Services, TV Today Network, BF Investment, PC Jeweller, Ester Industries, Binny, Emami Paper Mills, Allcargo Logistics, IDFC, Sadbhav Engineering and Rico Auto.

Gainers included Nucleus Software Exports, Shilpa Medicare, Finolex Cables, Mirza International, Primo Chemicals, Dishman Carbogen Amcis, Waaree Renewable Technologies, Steel Exchange India and Power Mech Projects.

BSE 500 index ended flat. Shilpa Medicare, Finolex Cables, Oil India, Tejas Networks, Torrent Power, Tech Mahindra and Privi Speciality Chemicals added 10-21 percent.

On the other hand, Adani Total Gas, Adani Transmission, Allcargo Logistics, IDFC, Indiabulls Real Estate, City Union Bank, RHI Magnesita India, Adani Green Energy, Balkrishna Industries, Campus Activewear, Macrotech Developers and Rajesh Exports declined 10-22 percent.

“Nifty, the front-line index on the weekly chart is trading above its 21- & 50-week exponential moving average (EMA) and a long-leg Doji formation is seen on the chart due to an increase in volatility,” said Rohan Patil, Technical Analyst, SAMCO Securities.

“This week, Nifty attempted to close above its big Budget Day high but Profit booking stepped in towards the last day of the week and forced the index to close below its psychological 18,000 mark. There has been a significant rise in open interest (OI) build-up at 18,000 levels by both calls and puts sellers, it looks like a tug of war between them.”

“Technically the structure is still bullish and Nifty stands at the strong polarity support, failing to hold which the index is likely to see a further correction towards 17,650 – 17,500 zones. Only a sustained close above the 18,200- 18,250 zone is likely to trigger bullish momentum toward 18,450 – 18,500 levels,” Patil added.

After 10 weeks, Foreign institutional investors (FIIs) turned net buyers in the Indian equity markets. The FIIs bought equities worth Rs 4,005.85 crore in this week. On the other hand, domestic institutional investors (DIIs) continued their buying as they bought equities worth of Rs 2,735.1 crore.

In the month of February, till now, FIIs sold equity worth of Rs 1,408.36crore and DIIs bought equities worth of Rs 9,188.15 crore.

Where is Nifty50 headed?

Amol Athawale, Deputy Vice-President – Technical Research, Kotak Securities

Markets witnessed turbulence on the back of weak global cues as investors booked profit in banking, IT and telecom stocks. Rising inflation, US bond yields, and dollar index are once again creating a lot of uncertainty amongst the investors.

For the bulls, 17,900-17,800 or 20-day SMA would act as a key support zone while 50-day SMA or 18,100 and 18,200 could be the immediate hurdle.

On the flip side, the selling pressure could accelerate if the index slips below 17,800 and in case of further correction, it could slip to 17,700-17,650.

Rupak De, Senior Technical Analyst at LKP Securities

The Nifty has fallen to the upper band of the falling channel on the daily chart. The trend for the near term is likely to remain sideways to positive as long as it remains above the falling channel

A recovery towards the higher level will likely happen if the bulls manage to hold the Nifty above 17,880. On the higher end, however, 18,150 is likely to act as resistance.

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