Nifty: Indices give up 1.6% of gains to end flat

Mumbai: India’s benchmark indices gave up nearly all of their session gains to end flat on Thursday as traders adopted a sell-on-rise approach into the relief rally triggered by overnight gains on Wall Street after US Federal Reserve’s rate hike was on expected lines.

The Nifty ended up 5.05 points or flat from the previous close at 16,682.65 while the Sensex ended up 33.20 points, or 0.06%, at 55,702.23.

Stock indices had gained as much as 1.6% during the session tracking gains in Asian markets after the Fed said it was not considering super-sized rate increases to counter inflation. Indices had fallen 2.3% in the previous session to nearly two month lows after the Reserve Bank of India announced a surprise increase in policy rate by 40 basis points.

“We are in a slightly corrective phase and it will last for some more time,” said Raamdeo Agrawal, chairman, Motilal Oswal Financial Services. “We have a strong earnings cycle on one hand and a strong rate cycle on the other hand.”

At its day’s high, the Sensex was up 898 points, or 1.6%, from the previous close and the Nifty was up 268 points, or 1.6%, from its day’s high. Volatility index India VIX dropped 7% to close at 20.3 after gaining for three consecutive sessions.

Foreign Portfolio Investors sold Indian shares worth ₹2,075 crore on Thursday while Domestic Institutional Investors bought shares worth ₹2,229 crore.

Markets have been treading down in recent weeks amid continued concerns over high oil prices, persistent selling by foreign investors, inflation and in anticipation of policy tightening by global central banks.

The Nifty is down nearly 8% from this year’s high of 18,114.65 on April 8. Technical analysts said several indicators are showing more bearishness for the Indian benchmarks going ahead.

“For the last 7-8 trading sessions, we are trading below the 50-, 100- and 200-day moving averages- both on the Bank Nifty and Nifty,” said Rajesh Palviya, head-technicals and derivatives at Axis Securities. “Both indices have seen death crossover – this clearly shows more bearishness is likely in short and near terms.”

The death cross pattern happens when a short-term average drops below a long-term moving average and formed recently on the Nifty and the Bank Nifty for the first time since March 2020.

“16,400 is an important level after which the next major support is 15,800 which is near to the previous swing low seen in February and on the higher side 16,850 and 17,000 are key resistance areas. Till the Nifty is trading below 17,000, sell-on-rise should be the strategy in any pullback,” said Palviya.

Of the 30 Sensex constituents, 16 ended in the red on Thursday. IndusInd Bank led the laggards with a 4% fall. Four of the top five gainers on the Sensex were IT stocks — Tech Mahindra, Infosys, HCL Technologies and Wipro, surging 2-4%.