Indian stocks end four-day falling streak on bottom-picking
10:51, 16 December 2021
Indian stock indices ended a four-day falling streak and closed in the positive zone for the first time in five days on bottom-picking by investors.
The bellwether Bombay Stock Exchange’s 30-share Sensitive index ended 0.2% higher at 57,901.14 points from its previous close. The most-traded National Stock Exchange’s (NSE) Nifty50 index gained 0.16% to close 17,248.4 points.
“Domestic bourses closed with a mild positive bias despite an upbeat economic outlook by the US Fed,” said Vinod Nair, head of research at Geojit Financial Services. “Domestic weakness was due to foreign institutional investors selling and moderation in retail activity.
“The Fed chair announced their decision to double the pace of asset tapering by early 2022, rather than mid-2022, paving the way for three interest rate hikes, backed by a rapidly strengthening economy and employment gains amid inflation concerns.
“This is mostly in line with expectations taken positively by the rest of the world equity market.”
According to local dealers, foreign and domestic institutional investors made stock purchases today. Profit-taking in late trade, however, pushed the indices lower from their day’s high, they told Capital.com.
US Fed moves
The broader market sentiment was assuaged after US Federal Reserve chairman Jerome Powell said the world’s largest economy doesn’t need a stimulus any more.
His comments meant the US central bank will end the bond-purchase programme, which has been used to inject cash into the beleaguered, Covid-hit economy.
Investors said the central bank can now focus on tempering inflation, which erodes the value of wages and assets.
“The economy no longer needs increasing amounts of policy support,” Fed Chair Jerome Powell said in a news conference after the conclusion of the two-day policy meeting.
His comments meant the market watchdog has now resorted to curbing inflation, as he said the Fed would reduce the pandemic-induced stimulus with a monetary policy shift, which will lead to higher interest rates in 2022.
“Economic developments and changes in the outlook warrant this evolution,” Powell said of the decision to pull back on bond purchases more quickly.
Sectoral indices still weak
“The [Nifty50] index opened the day with a good gap but profit booking since the start of the day erased most of the gains and the index closed the day with minimal gains. The index again respected the support zone of 17,200 and witnessed some pull-back,” said Rohit Singre, an analyst at LKP Securities in Mumbai.
All but one of the 11 sectoral indices ended in the negative zone, with the Nifty Media index falling as much as 1.77% and the Nifty PSU Bank index weakening 0.95%.
The Nifty IT index was able to buck the trend with a 1.18% gain. The advance-decline share ratio – the number of advancing shares divided by the number of declining shares – on the NSE was 758-1,244 today.
“Recovery in the select index majors in the final hours helped the index to pare losses and end in the green,” said Ajit Mishra, vice-president of research at Religare Broking in Mumbai.
“The sectoral indices traded mixed – IT, Consumer Durables and Oil & Gas ended with gains while Auto, Banking and Capital Goods ended with losses,” he added.
Tata Steel, India’s largest private-sector steel producer, said today it would spend INR4bn on a 20-year agreement with Angul Sukinda Railway for the construction, operation and maintenance of an alternative railway line to meet the requirements of its Kalinganagar steel plant.
Tata Steel will fund the project by subscribing to preference shares of Angul Sukinda Railway. The development couldn’t help the stock, which closed only a tad higher at INR1,156.15.
No major events now
“As all the major events are over now, we feel the performance of the global markets will be critical in days to come,” said Mishra.
“At the same time, we expect the buzz to continue in the primary market. Among the sectors, only the software pack looks decisive to us while others are witnessing mixed trends. Participants should plan accordingly.”
According to Singre at LKP Securities, the first support level for the Nifty50 index is 17,200. If the index holds on to that, it may possibly extend gains to the 17,370–17,450 zone, where it will find some resistance to going up further.