Mumbai, January 20: Monday saw sell-off in equities, banking stocks in particular and in index-heavyweight Reliance Industries Ltd (RIL). The sell-off was in the form of profit-booking as the Q3 results from some of the banking majors and RIL were below expectation. However, Asian markets were upbeat as optimism prevailed at higher level post last week’s signing of China-US trade deal. Also, ahead of the budget market had more than adequate run up, hence some resistance was expected, dealers said.
The Sensex slumped 416 points to settle at 41,528 while Nifty fell 1 per cent to 12,230. It was quite a reversal from the way markets opened today. In early trade, the Nifty hit 12,400 level for the first time when it rose 78 points to 12,430 at day's high. Similarly, the Sensex registered a new high of 42,273.
Asian markets were mostly higher today as the mood remained optimistic after the last week's signing of China-US trade pact. China's GDP data, which was released on Friday, also provided some reassurance to traders, indicating a growth slowdown in the world's number two economy may have bottomed out.
The sentiment was hurt after oil prices rose more than 1per cent today on supply concerns after exports from Libya were blocked after a pipeline was shut down by armed forces. And in Iraq, which is OPEC's second biggest producer, a strike at a key oil field hit output.
Vinod Nair, Head of Research, Geojit Financial Services said, “As expected, market has approached a consolidation phase due to mildly subdued Q3 results in banking and heavyweights. It is fair to expect this mild consolidation to continue in the short-term after the solid performance of the last one-month with fantastic gains in mid & small caps. For further direction, a lot will depend on the actual budget announcements and broader performance in Q3 result showing gain across the economy".
Among the banking stocks, Kotak Mahindra Bank fell 5 per cent while Axis Bank declined 2 per cent, HDFC Bank 1.5 per cent, IndusInd Bank 1.5 per cent and SBI 1.2 per cent. RIL shares fell 3 per cent on Monday.
Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services, says Nifty has major support at 12,150 levels. On the flipside, resistance is placed in the zone of 12,450-12,500, he added.
Rohit Singre, Senior Technical Analyst at LKP Securities said, “Nifty Index took strong resistance form upper band of the channel on weekly chart and witnessed selloff and forming a bearish engulfing candle pattern on daily chart which is again bearish reversal candle by nature. If index managed to sustain below 12,210, we may see some more cuts in index. Immediate support for Nifty is coming near 12,155-12,100 zone and resistance is coming near 12,280-12,350 zone. Until we trade below 12,400 level, we may see profit booking on every rise in index”.
Kotak Mahindra Bank reported a 23.6 per cent year-on-year increase in its standalone net profit for the December quarter to Rs 1,595.90 crore. But asset quality weakened during the quarter, with gross non-performing assets (NPAs) increasing 31.1 per cent year-on-year to Rs 5,413.20 crore.