Indices End Lower Despite Asian Rally; Nifty@26,800 Still in Play: Analysts
Market Overview
– Asian markets experienced significant gains, largely disregarding geopolitical tensions surrounding the U.S. capturing Venezuelan president Nicolas Maduro.
– Strong optimism regarding technology and AI fueled substantial growth, particularly in:
– South Korea: +3.4%
– Taiwan: +2.6%
– Japan: +3%
– China: +1.4%
– Hong Kong: marginally higher
– Brent crude futures rose by 0.4%, reaching $61.10 per barrel.
Indian Market Performance
– Despite a promising start, India’s benchmark indices were unable to maintain their gains, closing lower:
– NSE Nifty: 26,250.30 (down 78.25 points or 0.3%), after peaking at 26,373.2 intraday.
– BSE Sensex: reached an all-time high of 85,883.5 before settling at 85,439.6 (a decline of 322.4 points or 0.4%).
– Earlier in the day, both indices saw an increase of 0.2%.
Market Analysts Insight
– Gaurav Sharma, head of research at Globe Capital, explained, The markets remained unfazed by the U.S.-Venezuela situation as crude oil prices did not spike as anticipated. Nevertheless, profit-taking occurred at higher levels following the Nifty’s record high during the trading session.
– Notably, HDFC Bank’s downturn had a significant impact, with the stock falling 2.3%.
– In the IT sector, the Nifty IT index declined by 1.4%, making it the biggest sector loser, with HCL Technologies and Infosys both dropping over 2%.
Volatility and Trading Dynamics
– Nilesh Jain, head of derivatives and technical research at Centrum Broking, mentioned an increase in volatility following a robust closing on Friday, stating, This selling pressure at higher levels was expected. However, the overall market sentiment remains bullish, with expectations for the Nifty to potentially reach 26,800.
Broader Market Trends
– Broader market movements were mixed:
– Nifty Mid-cap 150: down 0.1%
– Small-cap 250: up 0.3%
– Among 4,471 stocks traded on the BSE, there were 1,672 advances and 2,603 declines. Notably, both mid-cap and small-cap indices rallied by around 2% last week.
Foreign Investments and Market Sentiment
– Foreign portfolio investors (FPIs) sold shares worth ₹36.3 crore on Monday, while domestic institutions purchased ₹1,764.07 crore.
– FPIs have offloaded a total of ₹3,077.1 crore thus far in January.
– Volatility increased, with the Volatility Index (VIX) rising 6.1% to 10.02. Jain noted, The index previously hit an all-time low of 9, making Monday’s pullback anticipated. The January series began strong, and roll-over data suggests potential for further upside, though it may not be a one-sided move.
Conclusion
In summary, while Asian markets rallied and optimism around technology and AI surged, Indian indices ultimately ended lower. Despite the downturn, analysts remain hopeful, anticipating a potential rebound for the Nifty as it targets the 26,800 mark. Understanding these dynamics is crucial for investors navigating the ever-evolving market landscape.