Daily Markets - June 16, 2021 - Mr. Deepak Jasani, Head of Retail Research, HDFC Securities
(Time Zone: UTC)
Indian Benchmark equity indices broke a four day winning streak and retreated from record highs following weak Asian cues and ahead of the US Fed meet outcome. The Nifty opened marginally in the negative, rose to go into the green in the first 20 minutes of trade but resumed its downtrend later. It closed almost at its intra day low. At close, the Nifty ended 101.7 points, or 0.64 percent, lower at 15,767.55.
Volumes on the NSE were similar to the previous day but below recent averages. Among sectors, IT was the only sector which ended marginally in the positive, while Realty, Power, Capital Goods, Consumer Durables, Telecom and Metals were the main losers. The BSE Midcap index closed 0.95 percent lower and the smallcap index fell 0.68 percent.
Markets mostly fell in Asia on Wednesday following a tepid lead from Wall Street. Fresh data out of China showed signs of the country's strong rebound from the Covid-19 pandemic starting to moderate, Chinese retail sales rose 12.4% YoY in May (vs 17.7% in April), despite the government's efforts to boost spending. China's industrial production grew 8.8% YoY in May, down from 9.8% YoY in April. Its fixed asset investment grew 15.4% YoY in May from 19.9% YoY a month ago. European stocks were slightly higher on Wednesday, aided by rising oil prices and as markets await the outcome of the U.S. Federal Reserve's policy meeting. Data on Wednesday showed British inflation unexpectedly jumped above the Bank of England's 2.0 per cent target in May and looked set to rise further as the country re-opens its economy from coronavirus-induced lockdowns.
Nifty fell ahead of the US Fed meeting as traders brought down their positions ahead of the event. This is also reflected in low volumes and sharply negative advance decline ratio. The market might be reluctant to push higher ahead of the Fed meeting beyond a point. While economists don't expect US Fed to alter rates or cut bond buying immediately, any indication of an earlier than expected roll back of stimulus may dampen sentiments. 15648-15835 is the band for the near term for the Nifty.