Mr. Deepak Jasani, Head of Retail Research, HDFC Securities
Nifty closed lower on Jan 18 closing below the lows of the previous four sessions. Weak global cues resulted in this weakness even as traders opted to take profits after a dream uprun in mid and smallcaps. Nifty opened higher and made an intra day top in the first 10 minutes of trade. It later fell sharply to make a morning low at 1020 Hrs. From there a slow recovery attempt took the Nifty to the afternoon high at 1310 hrs. A selloff post 1415 Hrs took the Nifty sharply down. At close, Nifty was down 1.07% or 195 points at 18113. In the process, Nifty registered its worst fall in 2022.
On a day when the volumes on the NSE were in line with recent averages, Bank index was the only one to end in the positive. Realty, Metals, Capital Goods, Auto and Telecom indices fell the most. BSE Midcap index fell 2.2% while Smallcap index fell 1.9%.
Asia's share markets turned negative on Tuesday as two-year U.S. Treasury yields topped 1% for the first time in almost two years. European markets have opened lower with technology underperforming amid concerns about faster tightening from the Fed and rising yields. A seven-year high for oil prices pushed benchmark German Bund yields to the brink of positive territory on Tuesday and left global share markets trudging lower.
Advance decline ratio has fallen sharply to below 1:3 suggesting broad based profit taking. The Nifty has formed a bearish engulfing pattern. Hence unless it crosses the high for Jan 18 i.e. 18351, we could see sell-on-rises scenario. A breach of 18056-18081 could lead to further weakness in the Nifty.