On the third trading session after the announcement of tax breaks, there was minor corrective movement in the broader market indices, which on Tuesday, resulted in the Bombay Stock Exchange’s Sensex 30 ending at 39,097 a mere 7.11 points up or a rise of a miniscule 0.02 per cent. Similarly, National Stock Exchange’s Nifty 50 ended the day at 11,588.20 or 12 points lower a decline of 0.10 per cent.
The decline in Nifty may have been larger had it not been for the upward movement of some large cap IT stocks, including the index heavy-weight, Reliance Industries, which gained, 3.22 percent, closing at Rs 1,278.
The upward movement of IT stocks, just a day after they had a seen a sharp correction, indicated that Bears were not comfortable in carrying monthly short positions to the October derivative series. That may indicate that the Bulls are likely to remain in the driving seat for now.
The broader market breadth (or number of shares in the green to those in the red) was positive, though some of the financial stocks witnessed more volatile movements during the day. Most financial shares -- both in NBFCs and private banking space -- witnessed profit-booking during initial part of the trade. However, towards the end, there was a short-term upside movement in a number of large caps like HDFC which remained in green territory for some time.
The Bank Nifty index -- which was down two per cent at one point -- recovered during mid-session. But because of the sharp declines in State Bank of India (4 per cent ) and axis bank (2.96 percent ), the banking index ended the day with a cut of 383 points or down 1.25 percent, to close at 30183.
Because Thursday, this week, is the day of expiry for both weekly and monthly derivatives’ contract on Nifty, the volatility is likely to spike, especially in the financial and metal stocks. The rollover position indicates that Bulls are more confident of rolling over their positions, based on indication that brokerages are coming out with earnings upgrades for many companies.
There were some jitters in the markets on Tuesday after the Reserve bank of India imposed restrictions on the Punjab and Maharashtra co-operative bank ltd for fresh loans -- with depositors constrained to withdraw funds only up to Rs 1,000. The fear on Dalal Street was that if a big corporate was a client of the co-operative bank, it would have a negative impact on the sentiments, which had started to turn around after a long time. But these fears seem to have dissipated by the end of the day.
(Shilpa Nagpal is an analyst at Market Wizards Securities Private Ltd)
