Indices recover partly from Wednesday’s cuts on DII buying
However, technical analysts say that greater clarity on market direction would emerge in Friday’s session.
The Nifty50 and the 30-share Sensex advanced 0.5% each to close at 21,255.05 and 70,865.10, respectively, as DIIs bought shares worth a provisional ₹1,464.70 and bears trimmed short bets in Nifty futures contracts.
The domestic buying and short covering supported the rally despite foreign portfolio investors (FPIs) selling shares worth a provisional ₹1,636.19 crore.
The benchmark indices had shed 1.3-1.4% on Wednesday after a seven-week rally that saw them climb 12% from their lows on 26 October. Fears of a return of covid, and changes to AIF regulations by the RBI were among the reasons attributed to the profit booking.
“It was profit-booking ahead of the year end,” said Andrew Holland, CEO, Avendus Capital Alternate Strategies, about Wednesday’s fall. “I think we could see some consolidation before markets resume their uptrend by the end of the Christmas week.”
Holland said crude prices hadn’t run up sharply despite the Yemeni rebel attacks on commercial shipping vessels in the Suez Canal corridor, said to be a fallout from the Israel-Hamas war.
Brent crude generic futures contract traded down almost 2% at $78.24 a barrel at 7 pm IST, which was way below its 52-week high of $95.96 following the outbreak of hostilities between Israel and Hamas in October.
Holland’s view on consolidation was supported by market technicals, which showed the market fell just short of retracing 50% of the fall from Wednesday’s record high 21,593 to Thursday’s low of 20,976.80.
The fall was a total of 616 points while a 50% retracement from low implies 308 points. Thursday’s closing of 21,255.05 meant a retracement of 278 points from the low of 20976.80.
“A recovery above 50% is viewed as a positive, so we will have to wait and see if the market trends above 21,285 tomorrow (Friday),” said Rajesh Palviya, technical and derivatives head of Axis Securities.
Palviya said if the market didn’t convincingly sustain above the 50% retracement, it could test Thursday’s low of 20,976.8.
Kruti Shah, equity analyst at Equirus, expects the market to test a new high in due course once it gains strength above the 50% retracement.
Interestingly, FPIs net sold Nifty futures worth ₹301 crore, but net purchased Bank Nifty futures worth ₹ 511.9 crore, taking their cumulative net bullish positions on index futures to 89,782 contracts on Thursday. This stands against 95,222 net bearish index futures contracts held by retail and HNI traders (client category).
The top five traded stocks by value on NSE included HDFC Bank ( ₹3,060.45 crore), IRFC ( ₹2,686.6 crore), InoxIndia ( ₹2,524.42 crore), IRCTC ( ₹2,147.9 crore) and ICICI Bank ( ₹1,804 crore).
The market’s rise was on a relatively lower traded turnover of ₹98,121.75 crore against Wednesday’s volumes of ₹ 1.27 trillion.
The Nifty Midcap 150 and Nifty Smallcap 250 outperformed the benchmarks, rising 1.45% and 1.69% each.
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Published: 21 Dec 2023, 09:43 PM IST
