Sensex falls 536 points, Nifty near 21,500; realty, PSU banks see buying

Domestic equities came under selling pressure for the second day as the benchmark indices logged losses on January 3 as well, with the pause signifying caution ahead of the third quarter earnings season that begins next week.

The Sensex fell 535.88 points, or 0.75 percent, to end the day at 71,356.60, and the Nifty closed 148.50 points, or 0.69 percent, lower at 21,517.30.

However, thanks to the broader market, market breadth favoured gainers. About 1,864 shares advanced, 1,449 declined and 73 remained unchanged.

“The lack of fresh triggers and concerns over valuation influenced investors to stay sidelined,” said Vinod Nair, Head of Research at Geojit Financial Services. “Weak global indicators like contraction in China and Eurozone manufacturing data added concerns about global economic recovery in 2024.”

The market is waiting for the release of Fed minutes, scheduled later in day, for rate cues . “As a rebound in the US 10-year yield and an uptick in the dollar index indicate Fed may not turn as dovish as expected,” he said.

Broader market indices outperformed with Nifty Smallcap 100 ending flat and Nifty Midcap adding 0.3 percent. Nifty 500, the broadest index on NSE, fell 0.26 percent.

Stocks & Sectors

Among sectoral indices, Nifty Realty was the biggest gainer, up 1.23 percent. Nifty PSU Bank and Nifty Pharma were other top gainers. Nifty IT and Nifty Metal plunged sharply.

Bajaj Auto, which will be considering buyback next week, was the biggest Nifty gainer, rising nearly 5 percent. Adani Enterprises, Adani Ports and Cipla were among other top gainers.

Hindalco Industries, JSW Steel, Tata Steel, LTIMindtree and Tceh Mahindra were top losers.

OUTLOOK for Jan 4

Rupak De, Senior Technical Analyst at LKP Securities

The Nifty dipped below the support level of 21650, resulting in a decline towards 21500. The prevailing sentiment appears weak, highlighted by the index closing below the crucial support at 21650. If it continues to drop below 21500 in the upcoming days, it could potentially exacerbate the negative sentiment, especially with expectations of substantial unwinding by put writers below 21500. The broader market outlook suggests a sell-on-rise strategy as long as it stays below 21650.

Ajit Mishra, SVP – Technical Research, Religare Broking

It is a healthy correction so far despite the underperformance of two key sectors viz. banking & IT and participants should focus largely on buying opportunities on dips till Nifty holds 21,200 level. Defensive viz. pharma and FMCG are attracting noticeable interest on the expected lines while others are contributing on a rotational basis. Traders should align their positions accordingly but refrain from aggressive longs.

Prashanth Tapse, Senior VP (Research), Mehta Equities

Profit taking continued for a second straight session due to weak global cues as investors exercised caution by trimming their equity exposure ahead of the US FOMC meeting on Thursday. IT and metal stocks were the laggards even as power, realty and oil & gas stocks attracted significant buying. Over the past few weeks, the rally was sharp and swift, and hence expensive valuations provided investors an opportunity to trim their equity exposure. Also, with the Union Budget round the corner markets may see bouts of volatility with a slightly negative bias in the near to medium term.