Markets end lower, Sensex holds 61,700, Nifty 50 erases 18,400; rupee weakens

The performance at home tracked feeble global cues as investors’ appetite turned sour after the Bank of Japan unexpectedly raised its upper limit for 10-year bond yield hinting at a hawkish policy shift. Markets have been volatile due to recession fears after US Federal Reserve and European Central Bank raised their key policy rate while maintaining their hawkish approach.

Sensex shed 103.90 points or 0.17% to end at 61,702.29, while Nifty 50 slipped by 35.15 points or 0.19% to close at 18,385.30. Earlier, in the day, Sensex had tumbled to as low as 61,102.68 and the Nifty 50 as well hit an intraday low of 18,202.65 before picking up momentum due to buying in heavyweight stocks.

Buying in heavyweights TCS and Reliance Industries led to limiting the losses. These two stocks were top performers. Also, Ultratech Cement, Adani Enterprises, IndusInd Bank, and Axis Bank were gainers.

Among the laggards were Tata Motors, HUL, Bharti Airtel, M&M, NTPC, and Maruti Suzuki.

In terms of sectoral indices, BSE Auto dived by over 227 points, while Capital Goods and Metal indexes on BSE dropped by 139 points and 104 points respectively. Energy stocks witnessed an upside. Bank Nifty dipped marginally by 54.25 points or 0.12% to close at 43,359.50 after hitting an intraday low of 42,955.40.

Vinod Nair, Head of Research at Geojit Financial Services said, “The Bank of Japan shocked global markets in a totally unexpected move by raising the upper band limit for the 10 yr yield to 50 bps, which is seen as a step towards a hawkish policy shift. This has aggravated the sell-off in the global market, which was already risk-averse due to mounting recessionary fears following the Fed’s comment. In this backdrop, the US GDP numbers expected on Thursday will provide a picture of the strength of the US economy.”

According to Deepak Jasani, Head of Retail Research, HDFC Securities, Nifty closed marginally in the negative after recovering sharply from the morning lows on Dec 20. Nifty recovered post-noon after the negative effect of the unexpected hawkish move by Bank of Japan to widen the band of long-term yields, withered off. Nifty closed 0.19% or 35.2 points lower at 18385.3.

On the global markets, Jasani added, it fell after the Bank of Japan unexpectedly changed its ultra-dovish stance and tweaked its bond yield controls – a move that will allow long-term interest rates to rise more.

Talking about the rupee’s performance, Dilip Parmar, Research Analyst at HDFC Securities said, the Indian rupee trimmed morning losses as Asian currencies recovered along with the yen which surged after an unexpected hawkish move from the Bank of Japan. Recovery in risk assets also supported the local unit in erasing the losses.

As for the rupee, the local unit weakened to 82.7550 against the US dollar compared to the previous day’s print of 82.7050 per dollar. During the day, the rupee dropped to touch 82.8850, however, shied away from crossing the 83 mark. Notably, the dollar index as well dipped as the Japanese currency rose to its second-best session against the greenback after the BOJ’s policy outcome.

Going forward, Jasani said, “Low market volumes have led to higher intra-day volatility in the markets. Nifty could now remain in the 18269-18441 band in the near term and a breach of this band could result in accelerated move in that direction.”

On Bank Nifty, Kunal Shah, Senior Technical Analyst at LKP Securities said, “the Bank Nifty bulls managed to hold the support of 43,000 on the downside and the index witnessed buying momentum throughout the day. The index is stuck in a broad range between the 43,000-44,000 zone and a break on either side will provide a trending move. The undertone within the range remains bullish and one should keep a buy-on dip approach around the mentioned support level.”

Whereas on the rupee, Parmar added, the near-term trend for the rupee remains weak amid foreign fund outflows and a mismatch between dollar demand and supply on year-end adjustment. He added, “spot USDINR is expected to consolidate in the broad range of 82.10 to 82.95 with positive bias.”

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