Suspense crime, Digital Desk : Indias market opened in the red on monday as the Sensex slumped 250 points while the Nifty also dipped to 25,000. Broader Markets continued their rally with midcap and smallcap indices further strengthening the argument.

Participation in the larger markets was healthy as indicated by the advance to decline ratio of 2:1 which showed greater number of stocks moving up compared to those moving down.

IT sector took a bigger hit post downgrading the US credit rating while PSU stocks continued capturing growth along with Real estate nontractables.

Some of the eliminated Nifty50 gainers are:

Bajaj car

Eicher Motors

Hero Motocorp

Power Grid Corporation

Others

Most of the movers were:

Eternal

Grasim Industries

Infosys

Tata Consumer Products

Tata Consultancy Services

Stock Highlights: Soared Bharat Electronics, ICICI Bank

ICICI bank refreshed its touchpoints at 52 week maximums of ₹1459 while Bharat Electronics aimed for 373.

There was a remarkable increase in stock volume for Delhivery, Paras Defence and HEG as they all surged above the 5 session trading average.

Market Sentiment and Global Context

The break in the downtrend for India VIX suggests there is growing market volatility as it gained by 5%. This shift was influenced by last week’s positive global trade developments which seems to be overshadowed by weakening sentiment and the geopolitical outlook.

Internationally, Moody’s reduced the US credit rating due to excessive spending and a volatile political environment, resulting in:

A drop of 1% for US Index futures (S&P 500 and Nasdaq 100)

A reduction of 0.2% in the dollar

Widening of the US treasury yield curve

Muted Global Market Indicators

Most of the Asian markets dipped:

Hang Seng: -0.6%
Nikkei 225: -0.4%
Shanghai Composite: -0.2%

European markets performed better:

Stoxx 600: +1.1%
FTSE 100: +0.6%
CAC 40: +1.4%
DAX: +0.2%

May 20 Outlook

Rupak De, LKP Securities Senior Technical Analyst, thinks the Nifty will use the 25,000 mark as a psychological resistance point and assume it’s in a sideways consolidation phase with potential support found in the 24,800-24,750 zone.

Ajit Mishra, SVP Religare Broking, witnessed a rather mixed trend with the outperformance coming from the realty, pharma, and auto sectors while IT underperformed. He recommends remaining cautious during this consolidation period noting that overall structure is still intact and advises a stock-specific approach.

After the recent consolidation, banking stocks have the potential to lead the next stage of the rally and could possibly drive the Nifty beyond 25,200. In the meantime, sectoral shifts and the movement of foreign funds will be very important for setting the direction of the market.

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