Sensex, Nifty: Monday blues bring market momentum further down

Amid the mixed global cues, major domestic indices opened in red. The benchmark BSE Sensex opened at 62,865 and currently trading at 62,611 points, down 270 points or trading at 0.41% lower and Nifty-50 of NSE also opened below 19,000 mark and currently trading at 18,625 points, down 70 points or trading at 0.39% lower.

Otherwise, markets continued to be on a roll in the week gone by. They were led by new lifetime highs on the benchmark indices with the midcap and smallcap stocks which showed strong traction getting almost there as well.

As the market breadth continues to expand, expect the midcap and smallcap stocks and the sector to post new lifetime highs in the week or weeks to follow.

BSESENSEX gained 574.86 points or 0.92 per cent to close at 62,868.50 points while NIFTY gained 183.35 points or 0.99 per cent to close at 18,696.10 points. The broader markets fared much better and we saw BSE100, BSE200 and BSE500 gain 1.18 per cent, 1.42 per cent and 1.50 per cent respectively. BSEMIDCAP was up 2.84 per cent while BSESMALLCAP gained 2.43 per cent.

Markets gained on the first four days of the week and there was some amount of profit taking witnessed on Friday in the benchmark indices while the midcap and smallcap gained on Friday as well.

The Indian Rupee gained 36 paisa or 0.44 per cent to close at Rs 81.32 to the US dollar. Dow Jones saw the markets gain on three of the five trading sessions. There was a very sharp swing day on Wednesday in the US, when markets after being negative gained over 700 points on a net basis.

The FED Chairman Jerome Powell said at a meeting on Wednesday, "Time for easing rate increases is coming". This led to the sharp recovery and optimism that going forward in 2023, we may not see 75 basis point rate hikes. All over the world one sees, short covering being a major reason for sharp and swift rallies and Wednesday was no exception.

In primary market news, we are likely to see two road shows of companies tapping the capital markets happening during the course of the week. While they are yet to announce details and timelines, the issues would open in the week beginning December 12. These issues are expected from Sula Vineyards Limited and Landmark Cars Limited.

The mood in the market currently is difficult to explain. Global markets are not at their best led by inflation which is at unseen levels though seems to have stopped rising and therefore Central banks have been raising interest rates. The war between Russia and Ukraine has become a never-ending affair and losing relevance as the world realises there is no short-term solution. In such a scenario, why the strong rally is a little baffling.

Downward momentum

The only explanation for India's rally is the fact that we have had a technical breakout when we crossed the lifetime highs and are undergoing the follow through momentum from the same. How much and how far this would go is still a matter to debate. There are a few stages which the market must go through before this momentum gets over.

Coming to the markets in the week ahead, expect the momentum to continue and become bigger with more stocks participating. Strong support exists at the levels of 18,450-18,500 on NIFTY and 62,100-62,250 on Sensex.

Levels of around 19,000 and 63,700-63,800 would be resistances. Buy on sharp dips and continue to book profits as markets see plenty of whiplashes and churning. One last point, we may have a situation where the benchmark indices do not perform while midcap and smallcap do so.

(With inputs from IANS)