Daily Markets - Jan 6, 2021 - Mr. Deepak Jasani, Head of Retail Research, HDFC Securities

After a gap up opening, Indian benchmark equity indices witnessed profit booking in the second half on Jan 06. Nifty opened at a record high but fell later. A sharper fall came in post 1330 Hrs. A feeble recovery post 1410 Hrs followed and hence the markets did not close at their intra day lows. At close the Nifty was down 53.20 points or 0.37% at 14,146.30.

Volumes on the NSE were the highest since Nov 27. Among sectors, Metals, Realty and Cement gained the most while IT and FMCG fell the most. Broader market indices - smallcap and midcap indices outperformed the Nifty.

Asian shares were mostly lower Wednesday as swelling virus counts, Hongkong crackdown and China-U.S. tensions weighed on sentiment.

European stocks were steady early on Wednesday but U.S. stock futures slipped as investors closely monitored the Georgia elections, in which the Democrats moved closer to a Senate majority. The Associated Press called one of the two seats for Democrat Raphael Warnock early on Wednesday morning. AP also projected a slim lead for Democratic challenger Jon Ossoff over Republican Sen. David Perdue. With a potential Democrat majority raising the prospect of further stimulus, the U.S. 10-year Treasury yield climbed above 1% for the first time since March, while the dollar fell.

Meanwhile, IHS Markit's survey showed economic activity in the euro zone contracted more sharply than thought at the end of 2020 and could get worse as renewed lockdowns hit the bloc's dominant service industry.

A gauge of India's services sector eased for the second straight month but remained in the expansion zone. The India Services Business Activity Index, compiled by IHS Markit, stood at 52.3 in December compared with 53.7 in November. The Composite PMI Output Index, however, fell to 54.9 in December compared to 56.3 in November.

Nifty has corrected after 10 days of rise. However the fact that it did not close at its intra day low is a consolation. The outcome of the US elections could have an impact on the US markets and then on Indian markets. As long as the 13985 level on the Nifty is not breached, this remains a buy-on-dips market.

Source : Equity Bulls

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