After a fortnight's winning streak, Nifty and Sensex land in the red

The frontline indices of the Indian stock market, the Sensex and the Nifty 50, ended in negative territory on Wednesday, on profit booking in shares of select heavyweights such as ICICI Bank, Infosys, and Larsen and Toubro (L&T) amid weak global cues.

The indices, however, recovered most of their losses during the session, thanks to gains in shares of Reliance Industries, Hindustan Unilever, and Asian Paints.

After opening sharply lower by 710 points at 81,845.50, the Sensex remained in the red throughout the session and touched the intraday low of 81,833.69, down 722 points. The Nifty 50, on the other hand, opened at 25,089.95 against its previous close of 25,279.85 and touched its intraday low of 25,083.80.

Eventually, the 30-share pack Sensex closed 203 points, or 0.25 percent, lower at 82,352.64, with 19 stocks in the red. The Nifty 50 closed with a loss of 81 points, or 0.32 percent, at 25,198.70, with 31 stocks in the red.

The BSE Midcap index also declined by 0.12 percent, but the Smallcap index bucked the trend, rising 0.32 percent.

What went wrong?

Weak global cues weighed on domestic market sentiment, triggering profit booking in select heavyweights. Market sentiment was dealt a blow after data on Tuesday showed US manufacturing remained subdued in August, reigniting concerns over an economic slowdown in the world's largest economy.

Following a sharp over 3 percent fall in Nasdaq overnight, several Asian markets, such as Japan's Nikkei and Korea's Kospi, fell up to 4 percent. Among the European markets, the UK's FTSE, France's CAC, and Germany's DAX declined by almost a percent each during trade.

"The warning signals from weak US manufacturing data added concerns about a potential slowdown in the US economy, which dragged the domestic indices,"  said Vinod Nair of Geojit Financial Services. "A sluggish Chinese outlook exacerbated the decline in oil prices to a nine-month low. Due to a lack of major domestic triggers, the indices will take direction based on global cues." 

The shares of Wipro, Coal India, and ONGC ended as the top losers in the Nifty 50 index. On the other hand, Asian Paints, Grasim, and Hindustan Unilever ended as the top gainers in the index.

In terms of index contributions, ICICI Bank, Infosys, Larsen and Toubro, Axis Bank, Coal India, and SBI ended as the top drags on the index in that order.

Among the sectoral indices, Nifty PSU Bank (down 1.69 percent), IT (down 0.94 percent), and Metal (down 0.75 percent) closed as the top losers.

Nifty Bank closed with a loss of 0.56 percent, while the Private Bank index declined 0.65 percent.

Technically speaking

According to Srikant Chouhan of Kotak Securities, for the day traders now, 25,100 would be the important support zone.

"As long as it is trading above 25,100, the pullback formation is likely to continue. On the higher side, immediate resistance would be 25,300-25,350. However, the dismissal of 25,100 could accelerate the selling pressure. Below it, the market could retest the level of 25,000-24,470," said Mr Chouhan.

"The Nifty 50 broke its upward trend by falling below the trend line on the hourly chart. However, the index found initial support at the historical swing high. Going forward, the index might consolidate between 25,080 and 25,250. A drop below 25,080 could trigger further correction towards 24800-24750/24,500, while a move beyond 25,236 might induce a rally toward higher levels," said Rupak De of LKP Securities.

(By arrangement with livemint.com)