Banks, IT stocks Drag Market for second consecutive session

The markets on Wednesday, February 17, cleared all the previous gains as investors went heavy on booking profits ahead of weekly expiry i.e. on Thursday. The markets opened on a negative front with the key index Nifty-50 slipping nearly 50 points from the previous close. Strong selling in Banks and IT stocks dragged the indices throughout the session on Wednesday.  

Sensex ended 400 points lower at 51,703.83, Nifty 50 down by 104.55 points at 15,208.90. The banks witnessed a downtrend throughout the session, HDFC Bank and IndusInd Bank dipped over two per cent each and also taking the Nifty Bank index below 37,000. FMCG sector also witnessed heavy selling pressure after several stocks in the sector declined post lower than expected quarter earnings for December 2020.  Nestle tumbled nearly three per cent in the intraday session and ended at 16,741.20.

On the banking front, PSU Banks continued to rally and gained the most since Budget 2021. Investors continued to take new positions in the stocks after the news reports on government’s decision of privatization. Bank of India and Central Bank have added nearly 20 per cent in the intraday session and Indian Bank posted a new 52-week high of 142.80.  

The consolidation in the market in the previous couple of sessions is due to profit booking in the Blue Chip stocks and the consolidation may extend for a short phase but the boosted market sentiment by FPI inflows and stronger economic recovery is likely to continue and will fuel the index to recover soon.  Spike in Covid cases in the last few days and weak global markets has also affected the markets at a narrow level.  

Sahaj Agrawal, Head of Research- Derivatives at Kotak Securities, commenting on the correction in the markets said, “Markets have established a medium-term uptrend and expected to scale 16000 and higher. In the short term, extended phase of consolidation is expected. Immediate support for the index is seen at 15000 above which 15500-15700 can be tested, while breach can invite a quick correction. We suggest accumulating frontline stocks on meaningful corrections. IT, FMCG and Energy stocks look attractive while Metals and Realty could witness consolidation.”