Daily Markets Wrap - Dec 20, 2021 - Mr. Deepak Jasani, Head of Retail Research, HDFC Securities

Nifty closed lower for the second consecutive session on Dec 20 in line with most global markets. Nifty opened gap down and kept falling till it made an intra day low at 16410 at 1255 Hrs. Later it bounced up from the lows to end above the intra day lows. At close Nifty was down 2.18% or 371 points at 16614. This was the second worst day for the Nifty in the last 8 months.

On a day when the volumes on the NSE were in line with recent averages, Realty, Oil & Gas and Metals indices fell the most. Smallcap and Midcap indices have performed worse than the Nifty, falling 3.3-3.4%.

The RBI said that the central bank would conduct a three-day variable rate reverse repo auction worth Rs 2 lakh crore on Wednesday. With the 3-day VRRR, the RBI tightened monetary policy and started to drain excess liquidity out of the system, pushing up the short term rates.

Investors were also jolted by news that US Senator Joe Manchin would not back Biden's $1.75 trillion Build Back Better bill, dealing a massive blow to the president and his hopes for giving an extra boost to the world's top economy. Goldman Sachs cut U.S. real GDP forecast for the first quarter of 2022 to 2% versus 3% previously, and marginally reduced forecasts for the second and third quarters.

Asian share markets fell and oil prices slid on Monday as surging Omicron cases triggered tighter restrictions in Europe and threatened to drag on the global economy into the new year. European stocks fell more than 2% on Monday amid a global sell-off in equities, with investors fretting over the spectre of tighter pandemic curbs hitting the global economy as cases of the Omicron COVID-19 variant surge.

Nifty fell sharply on Dec 20 and then recovered part of the losses. Number of Advances is at the lowest since April 12, 2021. Omicron led lockdown fears, doubts about passing of Biden's flagship infra spending bill and the RBI measure to withdraw/soak up liquidity resulted in this kind of a sell-off at a time when the institutions are anyway looking to take profits. While a small bounce in the Nifty is likely in the near term, Nifty has a good support from the 15860-16245 band where it may find durable support.16896-16966 band on the other hand could be a tough resistance on the upside.

Source : Equity Bulls

Keywords

Nifty Sensex DailyMarketsWrap HDFCSecurities