Swinging Sensex turns around in late trade

What a recovery! It looked like a certain negative finish for the Indian indices until things suddenly turned around in the dying minutes of trade. The two main Indian indices ended with decent gains at the end of a choppy session, thanks largely to the late upsurge. The non-index counters closed mostly subdued though, dragging down the market breadth for the day.

Finally, the Sensex ended at 16,739, up 95 points or ~0.6% from the last close. It earlier touched a day's high of 16,788 and a day's low of 16,611. It opened at 16,745.

The Nifty settled at 5,049, up 30 points. It hit a day’s high of 5,064 and day’s low of 5,004. It had opened at 5,044.



Apparently, the late charge was led by none other than index bellwether Reliance Industries (RIL) and ONGC. In fact, the Oil & Gas index rebounded smartly from session lows to end near day's peak. Even Power stocks like NTPC and Tata Power did well to recover from the lows.

But, Banks were clearly the leaders today, with Axis Bank and ICICI Bank pacing the rally across the sector. The Banking indices on the BSE and NSE was up 3.5% each while the index of PSU Banks on NSE too rallied over 3%.

Outside the main indices, Titan Industries was a notable gainer, lifting the Consumer Durable index by 2.3%. Power and Oil & Gas indices closed with a gain of ~1% apiece. Select Auto, Realty, Capital Goods and PSU stocks closed up as well.

On the other hand, FMCG was a big loser due to weakness in heayweight ITC. The stock was down more than 3%. Metals and Pharma indices also finished lower.

Among the 30 constituents of the Sensex, Bajaj Auto, ICICI Bank, Jindal steel, BHEL and Hero Motocorp were among the major leaders. On the other hand, ITC, M&M, Maruti, Hindalco and Coal India ended in the negative terrain.

Meanwhile, the India VIX on the NSE saw recovered to end higher by 1.3% at 21.96. The index had hit an intra-day high of 22.64 and a day's low 18.01.

With the F&O expiry due next week, the NSE Nifty witnessed positive rollovers across the board. Rollover in the Bank Nifty stood at ~30%, while in Nifty Futures it was at ~37%.

Technically, the Nifty nearly accomplished its upside potential of 5100 this week but has been facing multiple resistance around 5050-5075. An appearance of exhaustion gap on Thursday warrants for caution as any gap down opening in coming days would mean Nifty would be heading to its make or break levels of 4840.

Although Friday's closing was in positive terrain but weak market breadth and Doji like formation indicate that current trend is about to change. We would remain cautious with near term target of 4850.

After many days, the market breath turned negative, with 1481 stocks declining against 1363 shares advancing on BSE. Only 112 stocks remained unchanged.

Globally, most of the Asian markets closed with healthy gains as well as market players cheer encouraging economic data from across the globe and falling bond yields for debt-strapped eurozone nations. The Nikkei index in Japan was up 1.5% and Hang Seng index in Hong Kong ended higher by 0.9%, while the Chinese benchmark gained ~1%.

Meanwhile, the European markets were trading with slightly negative bias, as investors turned cautious ahead of the outcome of this week's talks between the Greek government and the bondholders over the proposed debt swap deal.

"Some cooling in the market was always on the cards after this month's powerful rally. So, one should not be surprised by the minor pullback today. That said, there is a likelihood of the January ascent continuing in the coming days, provided the FII flows remain strong and there are no major nasty surprises.

A combination of upbeat news from the external markets and improving FII inflows have helped support the risk rally this month in our markets. However, it remains to be seen of the momentum can be sustained going forward.

Next week is crucial for our markets. The RBI policymakers meet on Tuesday. Consensus is veering towards status quo on interest rates. Whether the RBI will cut the CRR is a mystery as of now," says Amar Ambani, Head of Research, IIFL.