Daily Market Wrap - Oct 6, 2021 - Mr. Deepak Jasani, Head of Retail Research, HDFC Securities
2021-10-06 21:30:43 (Time Zone: IST)
Nifty snapped a two day winning streak on Oct 06 driven lower by weak global cues. Nifty once again opened gap up on Oct 06, but soon ran into profit taking. After making an intra day low at 1025 Hrs, a slow recovery process began. Nifty reversed the morning gains post 1220 Hrs to go deep in the negative. At close Nifty was down 0.99% or 176.3 points to 17646.
On a day when the volumes on the NSE were higher than recent average, all the sectoral indices ended in the red, with Metals, Realty, Healthcare and Consumer durables leading the pack on the downside. S&P BSE MidCap shed 1.2% and S&P BSE SmallCap fell 0.5%.
Bond yields rose and European stocks retreated on Wednesday after energy prices surged, the IMF cut its economic growth expectations and New Zealand became the latest central bank to raise interest rates. European stocks tumbled more than 1% on Wednesday as a surge in oil prices intensified concerns over higher inflation, while investors moved out of high-growth tech stocks into banking shares.
Asian equities have seen heavy foreign outflows since the start of this month on concerns about China's property sector and on expectations that major central banks would raise interest rates soon amid concerns about rising inflationary pressures. As per Reuters, Foreigners have sold a combined net total of $3.35 billion in Asian equities this month as of Oct. 5, data from stock exchanges in India, South Korea, Thailand, Indonesia, Taiwan, Philippines and Vietnam showed.
Nifty has formed a lower top on a short term basis. It has also formed an engulfing top on daily charts which has bearish connotations. The weak advance decline ratio also suggests wide spread profit taking. Even if the global markets show some recovery, Nifty could after a small recovery again run into profit taking. Investors may take a part of their profits and raise cash, while traders can keep strict stoploss and reduce their positions till the sentiment improves.