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Private banks drag Sensex 208 points lower; Nifty barely holds 12,100

Mumbai: Losses in banking and financial stocks dragged benchmark indices lower on Wednesday. The 30-pack Sensex declined for the third straight day to close 0.50 per cent or 208 points lower at 41,115. Meanwhile, the 50-share Nifty dropped 0.52 per cent or 63 points to close at 12,107.

Investors decided to remain on the sidelines, ahead of the Union Budget on February 1.

The bears were back on the forefront, as the advance-decline ratio on BSE stood at 2:3, indicating that for every two stocks that gained, three declined.

Markets at a glance
The broader market outperformed the benchmark. BSE Midcap and BSE Smallcap indices dropped 0.32 per cent and 0.13 per cent, respectively.

BSE Metal and BSE Oil & Gas were the top sectoral losers, as they shed 1.57 per cent and 1.49 per cent, respectively. BSE IT index, on the other hand, was the top gainer, with a 1.09 per cent rise.

In the Sensex kitty of stocks, 21 of 30 constituents closed in the red.

Mortgage lender HDFC contributed the most to Sensex’s decline, as it shed 1.92 per cent. Private lenders ICICI Bank and Kotak Mahindra Bank followed suit, as they shed 1.51 per cent and 2.46 per cent respectively.

Paints maker Asian Paints dropped 1.76 per cent after its in-line third-quarter net profit growth of 20.2 per cent failed to impress investors.

Private lender Axis Bank and engineering and construction firm L&T closed 1.08 per cent and 0.64 per cent lower ahead of their quarterly earnings announcement later today.

A depreciating rupee sent IT stocks higher which helped Sensex cap losses. Sectoral leader Tata Consultancy Services (TCS) advanced 1.61 per cent, while peer Infosys rose 1.06 per cent.

Analysts’ views
“Nifty fell for a fourth straight session and wiped out gains of prior eight days. The near-term oscillators continued to be in sell mode and the index has also tested its medium-term average at 12,105. Any counter trend move could face headwinds around 12,160-12,200. While the next support falls near 12,000. Traders can use rallies towards 12,160-12,200 to reduce their leveraged long positions."
-- Arun Kumar, Market Strategist, Reliance Securities

“Nifty continued to consolidate in 11,800-12,500 range. Since the index was trading near the upper band of the range, selling pressure has pushed the index towards 12,100 level. We strongly believe the index is in a structural uptrend and the current correction is a buying opportunity. Volatility is expected to remain high on account of the upcoming event - Budget 2020. Traders are advised to maintain stop loss of 11,800 on Nifty and accumulate on longs. Investors can consider increasing positions in high quality frontline and midcap stocks.”
-- Sahaj Agrawal, head of research- derivatives at Kotak Securities.

“Nifty continued phase of correction as bears hold grip in the near term. Market breadth was on the negative side. We had mentioned about vulnerability of Nifty for further correction as upward momentum has weakened. 12,100 zone is important zone and a decisive breach below the support zone would further put pressure on Nifty downwards and in that scenario test of 11,800 zone on the downside cannot be ruled out.”
-- Manav Chopra, head research - equity, Indiabulls Ventures

Global markets
Asian and European stock markets recovered ground as China’s response to a virus outbreak tempered some fears of a global pandemic, although Shanghai shares initially slipped amid worries about a hit to domestic demand and tourism, Reuters reported.

The MSCI index of Asia-Pacific shares outside Japan rose 0.71 per cent. The pan-European STOXX 600 was up 0.2 per cent.
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