Equities decline amid relatively muted sentiment, lack of fresh triggers

Sensex fell 367 points and Nifty dropped 100 as thin year-end volumes and cautious sentiment prompted profit booking; investors await Q3 results and trade deal clarity

Equities declined on Friday, amid relatively-muted investor participation due to the slack year-end season and a lack of fresh triggers.

 

The Sensex on Friday ended the session at 85,042, a decline of 367 points or 0.4 per cent. The Nifty, meanwhile, closed the session at 26,042, a fall of 100 points or 0.4 per cent.

 

For the week, both indices ended with gains. The Nifty gained 0.3 per cent for the week after declining in the previous three weeks. And, the Sensex rose 0.1 per cent after declining in the last two weeks.

 

Total market capitalisation (mcap) of BSE-listed firms declined by ₹1 trillion to ₹474 trillion. For the week, the total mcap rose by ₹2.8 trillion. 

Participation in equity markets was relatively tepid amid the year-end period. Trading volume in the cash market stood at ₹87,672 crore against a six-month average of ₹1.05 trillion.

 

The benchmark indices hit fresh intraday highs in December, aided by good September quarter earnings and positive policy measures. They are the goods and services tax (GST) rationalisation and Reserve Bank of India’s (RBI’s) rate cuts.

 

But lack of clarity on the India-US trade deal has made investors circumspect. They are selling on every rise.

 

Foreign portfolio investors (FPIs) have been net sellers this month, worth ₹14,734 crore. On Wednesday, FPIs sold shares worth ₹318 crore, while domestic institutions were net buyers of ₹1,773 crore amid the rupee depreciation. 

 

“Domestic equities ended lower on Friday as thin year-end trading volumes and a cautious mood ahead of the upcoming earnings prompted broad-based profit booking. The optimism around the Santa Claus rally has diminished amid the absence of fresh catalysts, such as progress on a possible US-India trade agreement, while continued foreign institutional investor (FII) outflows weighed on the rupee. Largecap stocks underperformed mid and smallcap counterparts, though selective strength persisted in metals and consumer durable stocks. IT, auto, and banks witnessed sustained selling pressure,” said Vinod Nair, head of research, Geojit Investments

 

From now on, corporate results for the December quarter and positive news on the Indo-US trade deal may provide fresh triggers to the market.

 

The market breadth was weak, with 2,540 stocks declining and 1,690 advancing.

 

HDFC Bank, which declined 0.5 per cent, was the biggest contributor to the Sensex decline, followed by ICICI Bank, which fell 0.7 per cent.

 

“Going ahead, for Nifty, the zone of 25,950-25,900 will act as crucial support. Any sustained move below the 25,900 level could lead to the index extending its weakness further down towards the 25,800 level, followed by 25,600. On the upside, the zone of 26,200-26,250 will act as a strong resistance for the index,” said Sudeep Shah, head — technical and derivatives research at SBI Securities.