Profit taking trips overbought mkt

Volatility index surges 16% during week

The market turned volatile after healthy gains during the week that took the indices to record highs. The volatility index surged more than

16 per cent during the week, which is certainly not good news for the bulls. Also, the build-up in derivatives contracts showed the market was overbought, said analysts.

The Sensex fell 549 points, or 1.11 per cent, on Friday, closing just above 49,000 mark amid weak global cues. The benchmark index plunged 788 points intraday, touching a low of

48,795.79 before a pullback. Earlier, on Wednesday, Sensex had touched a new all-time high of 49,795.19 before a climbdown in the next two sessions.

The Nifty-50 Index shed

161.90 points to close at

14,433.70 on Friday.

The broader market also saw profit-taking with the BSE Mid-cap Index closing down 1.25 per cent and the Small-cap Index down

1.06 per cent.

During the week, the

Nifty-50 gained 3.2 per cent while the Sensex gained 2.7 per cent. Midcaps continued to outperform with the Nifty Midcap 100 Index gaining 5.2 per cent in the week.

"Considering the overall development seen in F&O (futures & options) space, we expect some follow up selling in the coming week as well, ” said Sneha Seth, derivatives analyst, Angel

Broking.

"The market remained volatile last week and hence we saw mixed activity in terms of open interest in the index futures segment and clearly suggested the market was overbought,"Seth said.

On Friday, only four of the 30 Sensex stocks and seven of the Nifty-50 stocks managed to close in the green.

Nevertheless, on a weekly basis Tata Motors was the biggest mover in

Nifty-50, gaining 32 per cent. Other two big gainers were Bharti Airtel

(11.7 per cent) and ITC (8 per cent).

Shrikant Chouhan, analyst-equity technical research, Kotak Securities, said, "The market is showing indecisiveness. The chart indicates that the market has taken a breather ahead of the major event of Union Budget, which is scheduled on February 1, 2021."

Provisional data showed domestic institutions were net sellers on Friday of equities worth Rs 942 crore while foreign portfolio investors were net buyers by Rs 971 crore.