After The Bell: Market falls for the third day, what should investors do on Thursday?
Indian shares ended lower for the third day on July 20 as investors remained wary of the spread of the Delta variant of the coronavirus threatening to derail the global economic recovery.
The S&P BSE Sensex closed 355 points lower at 52,198, while the Nifty closed with losses of 15,632. The broader indices mirrored the benchmarks. Both BSE mid and small-cap indices were down more than a percent each.
The market will be closed on July 21 on account of a public holiday and trading will resume the next day.
“Bears dominated D-street following overnight selling in global markets due to spread of the highly contagious Delta variant and fall in economic growth data. Sharp fall in crude price and US bond yields reflected the rising concern over fall in future growth,” Vinod Nair, Head of Research at Geojit Financial Services, said.
“Vulnerability from premium valuations, upcoming FOMC meeting, and selling by foreign investors exposed the Indian market. However, western markets attempted to recover from the sell-off which provided some comfort to the domestic market in between but selling continued,” he said.
Broader markets remained weak throughout the session. The BSE midcap index was down 1.2 percent and the smallcap index fell 1.4 percent.
Sectorally, selling pressure was seen in realty, metals, power, telecom, utilities and banks.
India VIX moved up by 4.14 percent from 12.68 to 13.20. Spike in volatility was due to decline in the market but overall, a lower VIX can again attract some buying interest on declines near key support zones.
On the options front, the maximum Put OI is seen at 15,000 followed by 15,500 strikes, while maximum Call OI is placed at 16,000 followed by 15,800 strikes. Options data suggests a broader trading range between 15,500 and 15,800.
The Nifty Bank closed with losses of nearly 2 percent at 34,415. The fall was led by losses in AU Small Finance Bank, IndusInd Bank, IDFC First Bank, and Federal Bank. All index constituents closed in the red.
The Bank Nifty opened gap down and sharply moved downwards to breach its 50-DMA.
“Banking stocks dragged the index lower and bears had a complete grip over the rate-sensitive index. It closed near 34,400 with losses of around 670 points,” Chandan Taparia, Vice President | Analyst-Derivatives, Motilal Oswal Financial Services, said.
It formed a bearish candle on the daily scale and formed lower highs from the last three sessions. If it holds below 3,5000, more weakness can be seen towards the next support at 34000-33900, he added.
Here’s what experts suggest investors should do on July 22:
Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments
The market closed above the 15,600 support, which is heartening for the time being. The short-term trend gets threatened if this level gets broken on a closing basis.
If a reversal happens, the Nifty can scale up to 16,000-16,100. It is better to wait for a clean direction to emerge as the current risk is to reward ratio is skewed in favour of the risk.
Chandan Taparia, Vice President | Analyst-Derivatives, Motilal Oswal Financial Services
The Nifty formed a bearish candle on a daily scale and continued for form lower highs-lower lows of the last two sessions.
Now, the index has to cross and hold above 15,700 to move towards 15,800 and 15.900. On the downside, support exists at 15,550 and 15,450.
Rohit Singre, Senior Technical Analyst, LKP Securities
The index managed to hold above 15,600, which suggests that if current levels are held, we may see some pullback in the upcoming session.
The pullback could take the Nifty towards the immediate hurdle zone of 15,700-15,770 and supports are still placed at 15,600-15,530.
Gaurav Ratnaparkhi, Head, Technical Research, Sharekhan by BNP Paribas
The Nifty opened on a negative note on July 20 and traded with a downward bias. On the way down, it broke certain key short-term supports like a couple of swing lows and a rising trendline.
The index went below the junction of the 40-day EMA, and the daily lower Bollinger Band on an intraday basis but recovered to some extent and closed right at the junction. The daily momentum indicator has turned bearish again.
This shows that the Nifty is under pressure and is likely to trade sideways in the short term. On the downside, the June low of 15,450 will act as the subsequent support. Thus, the short-term range for the Nifty will be 15,450-15,900.
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