The domestic stock market failed to maintain its opening gains on Monday, weighed down by widespread profit-taking, while small and mid-caps extended their slide on growing concerns over high valuations. The midcap index fell over 2% as the PSU basket posted profits.
G Chokkalingam of Equinomics Research said the risk of a significant correction in small and mid-caps is steadily increasing due to extremely high valuations.
Investors are now awaiting the inflation figure in India, expected Monday at 5:30 p.m. Retail inflation fell to a three-month low of 5.10% in January, thanks to slowing food price increases.
Meanwhile, foreign investors were net buyers, purchasing ₹127 crore in the spot market on February 12, while domestic investors also purchased ₹1,712 crore in shares.
What do the experts say?
According to Vinod Nair of Geojit Financial Services, a rise in FX margin requirements has led to a reduction in positions, mainly in mid and small caps. Apart from the pharmaceutical and IT sectors, sales were widespread, with notable difficulties in PSU banks.
“The premium valuation gap between mid- and large-caps has reached its all-time high. Despite strong economic forecasts, corporate profits are expected to slow due to moderate operating margins. It will be challenging for the broader market to maintain “The valuation of premiums. Large caps should excel amid consolidation,” Nair said.
“This is a new period of profit-taking and it has always been pending,” said Siddharth Sedani, head of equity products and advisory support at Anand Rathi Financial Services, adding that “the RBI’s decision not easing its monetary policy also disappointed the markets.” “.
Nifty remains limited
While Nifty remains range-bound with 21,500 serving as strong support, current struggles in the broader markets indicate a likelihood of breaking these levels, potentially paving the way lower towards 21,350 – 21,250 in the coming sessions. Conversely, resistance levels declined around 21,800 – 21,850, after acting as barriers in the previous two sessions, said Rajesh Bhosale, technical analyst at Angel One.
Bhosale advised traders to reduce their long positions during any price rebound and refrain from bottom fishing until clear signs of strength appear.
According to Nagaraj Shetti of HDFC Securities, a long bearish candle has formed on the daily chart, putting it on the verge of downward breakout of the crucial uptrend line support at 21,600 levels.
“Weakness in the benchmark Nifty on Monday was accompanied by a sharp decline in broader market indices like the mid- and small-cap segments. This is not a good sign. The short-term trend of Nifty is negative. The benchmark and broader market indices are now positioned to show further weakness in the near term. The next lower support for the Nifty lies at the levels of 21,200-21,150 for this week .Immediate resistance is at 21,800 levels,” Shetti said.
Rupak De, senior technical analyst at LKP Securities, said the Nifty fell further after a consolidation breakout on the hourly chart, indicating an increase in pessimism. “The daily chart shows the index forming a lower high, signaling a decline in bullish sentiment. The momentum indicator aligns with this bearish outlook, showing a crossover. The Nifty could continue to trade higher as long as “It remains below 21850. On the downside, support is located at 21500.”
What do the Nifty Bank Charts indicate?
The Bank Nifty index witnessed continued dominance of the bears, with clear rejection seen at higher levels, said Kunal Shah, senior technical and derivatives analyst at LKP Securities.
“A close below the 45,000 short-term support zone signals bearish sentiment. The index faces immediate resistance at 45,100, and a breakout could trigger short-covering moves towards the 45 levels 500. Conversely, immediate support is at 44,800, and breaching this level could intensify selling pressure towards the 44,000 mark,” Shah said.
According to another analyst, for the first time in over three months, Nifty Bank closed below its 200-DMA, putting the banking index in bearish territory. On the daily time frame, Nifty Bank formed a bearish engulfing candle crossing the crucial level of 45000. 44500 is the crucial support to watch out for in Nifty Bank. On the upside, the 45,000 to 45,250 area will likely provide huge resistance.
Here are the stocks to watch ahead of Tuesday’s trading session:
– JSW Energy arm, JSW Neo Energy, gets letter of award (LoA) for 500 MW wind power project from Solar Energy Corporation Of India (SECI).
– Suzlon Energy has appointed Vivek Srivastava as CEO – WTG Division with effect from February 12, 2024.
First publication: February 12, 2024 5:58 p.m. STI
News Source : www.cnbctv18.com