Sensex, Nifty end lower after three sessions as pharma stocks fall

Sensex and Nifty ended flat with negative bias on Wednesday, on back of heavy selling pressure in pharma stocks, amid negative global equities. Reversing gains after three straight sessions, Sensex ended 37 points lower at 38,369 and NSE Nifty 50 closed 14 points lower at 11,308. On Tuesday, Sensex ended 244 points higher at 38,407 and Nifty closed 52 points higher at 11,322.

Bajaj Finance, followed by L&T, Bajaj Finserv, Sun Pharma, Kotak Bank, HDFC Bank and Reliance Industries were among the top losers on Sensex. On the other hand, SBI, M&M, Maruti, Bajaj Auto and Titan were among the gainers. Sectorally, buying in IT, banking and auto stocks were capped by losses in pharma, metals and realty indices.

"The encouraging response to the fundraising by the lending firms has boosted the investors' sentiment towards the banking stocks, which in turn helping the benchmark to sustain at the higher levels while other sectors are taking a breather after a substantial rally," said Ajit Mishra, VP - Research, Religare Broking.

Domestic benchmarks fell majorly by Wednesday's opening bell, with BSE 30-share Sensex trading 218 points lower at 38,188 and NSE Nifty 50 falling 72 points lower at 11,250. Although, market indices recovered from losses and traded bit lower, amid the positive opening of European indices.

Traders said weak domestic factory output data further dampened investors' mood. India's industrial output contracted to 16.6% in June as against a 1.3% growth year-on-year (YoY), as per the Index of Industrial Production (IIP) data released by the government on August 11.

Weak global markets

Overseas, Asian stocks closed lower on Wednesday amid US-China tensions and on concerns over cases of coronavirus. European markets opened higher as investors continued to hope for a US stimulus deal to support the economy which outweighed the tension between US and China.

In Wall Street, stocks closed lower on Tuesday on growing uncertainty about fiscal stimulus deal in Washington.

"Global cues added to the uncertainty with doubts emerging about the expected US stimulus measures and continuing US-China tensions, said Vinod Nair, Head of Research at Geojit Financial Services.

For the near term market trend, Ajit Mishra, VP - Research, Religare Broking," Since we're largely mirroring the global markets, further developments on the stimulus package announcement and US-China trade tension would be actively tracked by the participants for cues."

Technical outlook

As per Nifty's technical indicators, support is placed at around 11,290 and then at 11,257 levels, while resistance is observed at 11,364 and then at 11,406 levels."

Commenting on markets' closing today, Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments said," Markets continued in a range but managed to keep above 11250. We are in a market where dips can be bought into - the target for the Nifty should be 11500. A support or stop loss can be placed below 11100."

Meanwhile, April-June quarterly earnings announcements by Aurobindo Pharma, Bharat Forge, Ashok Leyland, Tata Power, Cummins, Advanced Enzyme, Aster DM Healthcare, Natco Pharma will also set the tone for the stock market tomorrow.

In India, coronavirus cases surpassed 23 lakh mark today, with total deaths standing at 0.46 lakh. Worldwide, there are 205 lakh confirmed cases and 7.45 lakh deaths from COVID-19 outbreak.

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