Selling pressure seen near 12K levels

The Sensex dropped 330 points on Friday after Moody's Investors Service flagged domestic growth risks and cut its ratings outlook for the country to negative. The ratings agency also cut its ratings outlook for a clutch of companies to negative, including HDFC Bank, SBI, IOC and Infosys.

Profit-booking in the market following the recent record-setting run and unease over frothy valuations also took their toll, analysts said. Trading on a weak note, the Sensex ended 330.13 points, or 0.81 per cent, lower at 40,323.61. The Nifty-50 plunged 103.90 points, or 0.86 per cent, to end at 11,908.15.

For the week, the Nifty made a gain of 0.15 per cent, while the Sensex gained 0.39 per cent. The Sensex had closed at fresh lifetime highs in three of the five sessions this week, while the Nifty had reclaimed the key 12,000-mark after five months.

Tecnnical View

Chandan Taparia, Analyst-Technical & Derivatives, MOFSL, said: “The Nifty failed to hold the gains above 12,000 level and drifted sharply towards the 11,888 level. It formed a bearish candle on the daily scale and a Doji on the weekly scale. Selling pressure is seen near 12,000 and 12,050 levels. The index has to continue to hold above 11,850 level to witness an up-move towards 12,035 and then 12,103 levels, while on the downside supports are seen in the 11,780-11,750 zone.”

Market Outlook

Vinod Nair, Head of Research, Geojit Financial Services, said: “Rating downgrade forced investors to book profit in a volatile market… Trend of the market will be dictated by macro releases. India’s CPI inflation is expected to be on the higher side at 4.3 per cent due to rise in vegetable prices as per consensus estimates… However, global concerns related to trade war has eased and the same could provide comfort for investors.”

Jitendra Panda, Chief Executive Officer at Peerless Securities Ltd, “The Sensex had climbed to a record high in the previous session and investors expected a small decline in stocks. It is more of profit-booking rather than jitters due to the Moody’s.”