Market snaps 7-session gaining streak; weak sentiment likely to continue on expiry day

Indian benchmark indices ended their seven-session winning streak and closed lower on Wednesday ahead of the monthly expiry session. Investors resorted to profit booking at higher levels amid lack of clarity on U.S. tariff policies after recent rally.

The BSE Sensex lost 729 points, or 0.93%, to settle at 77,288, and the NSE Nifty ended 182 points, or 0.77%, lower at 23,487 levels. In line with benchmark indices, the broader markets also witnessed profit booking, with the Nifty Midcap100 and Nifty Smallcap100 indices ending down by 0.62% and 1.07%, respectively. 

Technically, after a muted open, the market consistently faced selling pressure at higher levels. From the day's highest points, the Nifty and Sensex corrected over 285 and 950 points, respectively.

"The market experienced profit booking after the recent gains, on the back of next week's U.S. tariff announcements. The sectors with higher exposure to the U.S. market, like pharma & IT, have witnessed some selling pressure,” said Vinod Nair, Head of Research, Geojit Investments Limited.

“With the onset of FIIs inflow, revival in domestic fundamentals and favourable valuation, the market is expected to trade with more stability," he added.

On the BSE Sensex pack, 26 out of 30 shares ended in red, barring IndusInd Bank, Power Grid Corp, Titan Company, and Mahindra & Mahindra. The top five losers were NTPC, Zomato, Tech Mahindra, Bajaj Finance, and Axis Bank, falling in the range of 2-3.5%.

On the sectoral front, media, PSU, realty, banking and pharma lead the decline, sliding in the range of 1-2%.

Weak sentiment likely to continue on expiry

Shrikant Chouhan, Head Equity Research, Kotak Securities, opines that as long as the market is trading below 23,600 and 77500, weak sentiment is likely to continue. On the downside, the Nifty and Sensex could retest the levels of 23,400-23,330/77,000-76,800. On the other hand, if it moves above 23,600/77,500, the sentiment could change, and the market could bounce back up to 23,700-23,760/77,800-78,000, he said.

“Going ahead, we expect Nifty index to consolidate in the range of 23,850-23,200 thus working off the overbought condition developed in the daily stochastic after the recent sharp rally of 1,900 points in just 15 sessions,” said Bajaj Broking Research in a note.

The brokerage believes that overall trend remain positive and the current breather should be used as a buying opportunity in quality stocks in staggered manner for up move towards 24,100-24,200 levels in the coming sessions.

Meanwhile, Bank Nifty witnessed corrective decline for the second session in a row ahead of the monthly expiry session on Thursday. “Going ahead, we expect the index to consolidate in the range of 52,000-50,500 thus forming a base for the next leg of up move and in the process work off the overbought condition developed in the daily stochastic,” Bajaj Broking said.

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)