Sensex dips 55 points; Nifty closes below key support amid sectoral divergence

In a day of mixed trading, the Sensex and Nifty closed lower on Friday. The Nifty 50 index declined 51.15 points, or 0.21 per cent, to settle at 24,148.20. The Sensex, on the other hand, closed at 79,486.32, down 55.47 points, or 0.07 per cent.

The market trading was lacklustre, with sectors like IT and FMCG showing gains, while realty and energy stocks faced pressure, according to Ajit Mishra, SVP, Research, Religare Broking Ltd. “...This mixed sectoral trend is leaving participants uncertain about the market’s next direction. While IT stocks have regained momentum following last week’s dip, the banking sector remains stuck in a range. Given the current scenario, a cautious stance with a hedged approach is advisable until clearer market signals emerge,” he said.

Amol Athawale, VP-Technical Research, Kotak Securities, noted that the benchmark indices witnessed a “roller coaster activity” during the week, with the Nifty ending 0.80 per cent lower and the Sensex down by 240 points. “...During the week, after a sharp correction, the market took support near 23,850/78,250 and bounced back sharply, but due to profit booking at higher levels, it corrected sharply. Technically, 24,100/79,300 and 24,000/79,000 would act as key support zones for the traders,” he added.

On the sectoral front, the IT index was the top gainer, rallying over 3.78 per cent, while the Realty index shed over 4 per cent. Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas, observed that the Nifty is in the process of retracing the rise it witnessed from 23,800 to 24,500. “...Currently, it is trading around the 61.82 per cent Fibonacci retracement level (24,090), which is likely to provide support, and holding which can lead to a resumption of the upward move. A break below 23,970 is likely to weaken the structure,” he said.

The Bank Nifty continued to decline for the third consecutive session and closed below key daily moving averages, suggesting weakness. “...We expect the range-bound price action to continue within 51,000 – 52,500 from a short-term perspective. Divergence among the daily and hourly moving averages can lead to a range-bound price action and volatility from a short-term perspective,” Gedia added.

The markets also remained cautious due to “disappointment in earnings and the flight of FIIs,” according to Vinod Nair, Head of Research, Geojit Financial Services. “...The US Fed continued its rate-cutting cycle to stimulate the economy and is expecting a similar 25-bps rate cut in the December policy meet amid moderation in inflation. While inflation in India is estimated to increase in October, and the strengthening USD would reinforce RBI to hold the rate in the near-term,” he said.

Major gainers, losers

On the sectoral front, the top gainers on the NSE were M&M (2.40 per cent), Titan (1.99 per cent), Tech Mahindra (1.57 per cent), Nestle India (1.46 per cent), and Infosys (1.27 per cent). The top losers were Trent (-3.50 per cent), Coal India (-2.72 per cent), Asian Paints (-2.67 per cent), Tata Steel (-2.42 per cent), and SBI (-2.15 per cent).

Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates Ltd. (A Pantomath Group Company), noted that the Nifty opened flat, witnessed selling pressure, and concluded the day on a negative note at 24,148 levels. “...Technically, on a daily basis, the index formed a red candle, indicating weakness. Thus, on the higher side, the index’s initial hurdle will be around 24,500, followed by 24,700. However, the index continues to respect the 150-day exponential moving average (DEMA) support near 23,990, as well as recent swing support near 23,800,” he said.

Joseph Thomas, Head of Research, Emkay Wealth Management, highlighted the volatility in the equity markets, which remained under pressure ahead of the US Presidential elections and the FOMC meeting. “...The results of the US Presidential election provided some kind of a mid-week relief rally, but the concerns over potential inflation and sluggish growth lingered on. On the domestic front, the weak earnings season kept the investor sentiment quite subdued,” he said.

Overall, the markets remained volatile, with a mixed sectoral trend and uncertainty about the market’s next direction. Investors are advised to maintain a cautious and hedged approach until clearer market signals emerge.