Sensex ends 694 points lower, Nifty falls below 12,900 amid profit-booking

After hitting record highs, market indices closed almost 1.5% lower each on Wednesday, tracking profit-booking in index majors and mixed cues from global markets. Reversing the trend from 3 days of consecutive gains, Sensex ended 694 points lower at 43,828 and Nifty fell by 196 points to 12,858.

Ahead of monthly derivatives expiry, Sensex hit a lifetime high of 44,825 today, while Nifty touched a record high of 13,145. Yesterday, Sensex ended 445 points higher at 44,523 and Nifty gained 128 points to 13,055.

Kotak Bank followed by Axis Bank, Sun Pharma, HDFC Bank, Bajaj Finance, and Asian Paints, were among the top losers in the Sensex pack. On the other hand, ONGC, PowerGrid, and IndusInd Bank were the gainers.

Among sectors, except PSU Banks, all the other indices closed in red today, with almost 2% losses registered in realty and pharma, and almost 1.5-1.8% fall in all the other indices.

 Having seen a sharp jump in the last three days, domestic equities witnessed a sharp correction today. Positive momentum in the race for a coronavirus vaccine has boosted global markets and led rally to record highs that resulted in profit booking in second half of the session.

US markets closed higher with Dow Jones moving past 30,000 for the first time as the Trump administration officially began the transition process to President-elect Joe Biden following weeks of delay.

Global equities were mostly buoyed today encouraged by news on the development of coronavirus vaccines and more assurance for a transition of power in the US to President-elect Joe Biden. While bourses in Shanghai and Seoul settled in the red, European shares were also trading on a mixed note in early deals.

Investors also awaited the FOMC's minutes from its last meeting due later today for clues on the direction of monetary policy.

Keshav Lahoti- Associate Equity Analyst, Angel Broking said, "Indian market opened in green but due to profit booking closed at close to day's low by correcting by 1.5%. In line with our expectation, profit booking was across all the sectors. Global cues were neutral, Dow Futures and Nasdaq Futures were flat, whereas FTSE was down by 0.4%. Sector-wise, we are more bullish on IT, Pharma, and Chemical stocks due to the structural positive change brought in the sector due to Covid-19. We advise investors to have ~15-20% in cash so that they can utilize the cash when the correction happens in the market. From these levels, unlike the last few days, we don't expect a sharp rally in the market."

Expressing views on Nifty's technical outlook, Ashis Biswas, Head of Technical Research, CapitalVia Global Research Limited- Investment Advisor said," The market failed to show resilience to stay above the Nifty 50 Index level of 13040. While it is subject to further price action evolution, our research suggests technical factors are aligned to support a lackluster market movement going forward. We expect any corrective wave down should found support around 12890-12860. As such we advise the traders to refrain from building a fresh buying position until we witness a correction till 12890-12860 level. We have observed volatility to expand in today's trading session indicating profit booking and distribution of stocks at a higher market level."

Vinod Nair, Head of Research at Geojit Financial Services said, "The market rally which was led by developments on vaccine and FPI inflows came to a halt today due to profit booking across sectors in the second half of the trading session. While western market continued its positivity, being encouraged by news on vaccine developments and ease in the US political risk. We can expect profit booking to continue in our domestic market, in the short-term, as the liquidity-driven rally can take a pause having reached an all-time high on a monthly basis. This money was triggered by the overwhelming result of the US election unleashing high amounts of funds that were put on-hold. FIIs can take a breather and check for the next phase of policies in the US and Europe for 2021."

However, on the currency front, the rupee settled 10 paise higher at 73.91 amid a weak dollar and positive development on the coronavirus vaccine front. --

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