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The Indian equity market experienced a day of intense volatility on Wednesday, February 13th, ultimately closing marginally lower despite a significant intraday recovery. The Nifty 50 index, after a five-session decline, opened lower and faced immediate selling pressure, dropping over 250 points in the first hour. This sharp initial fall reflected the persistent negative sentiment fueled by continued foreign institutional investor (FII) selling and mixed earnings reports. The global economic uncertainty further contributed to the bearish market mood. However, a remarkable turnaround occurred after 10:30 AM, with the Nifty staging a 350-point recovery from its intraday low of 22,798. This impressive rebound, primarily driven by financial stocks, showcased the underlying strength and resilience within the market, despite the overall negative trend. The index eventually settled at 23,045, a modest decline of 26 points (0.12%).
The mid- and small-cap segments mirrored the Nifty's volatile performance, exhibiting similar resilience. Both indices experienced substantial intraday recoveries from their lows, with the Midcap index bouncing back 2.8% and the Smallcap index surging 3.5%. However, similar to the Nifty, both ultimately ended the day in the red, with declines of 0.26%. This suggests a broader market trend influenced by the overall sentiment, although some sectors showed more resistance than others. Individual stock performance varied considerably. Reliance Industries, a significant index heavyweight, contributed significantly to the downward pressure, declining by 1.5%. Mahindra & Mahindra experienced the most substantial fall among individual stocks, dropping 3.2%. This highlights the sector-specific influences impacting the overall market movement.
Sectoral performance was mixed, with financial services, metal, and PSU banks showing strength, while realty, oil and gas, and auto sectors experienced selling pressure. The auto sector's weakness was particularly notable, with Mahindra & Mahindra and Eicher Motors among the top losers. Interestingly, insurance stocks rallied following the retention of the existing corporate tax rate in the I-T Bill, demonstrating the impact of specific policy decisions on market sentiment. The mixed performance across sectors indicates the diverse factors at play, influencing investor decisions and overall market direction. The case of Hindustan Aeronautics Limited (HAL) further exemplifies this complexity. Despite reporting increased year-on-year performance in its December quarter results, HAL shares closed nearly 2% lower due to an Indian Air Force complaint about Tejas fighter jet delivery delays. HAL's subsequent assurance of resolving technical issues and resuming deliveries suggests a potential short-term market overreaction, highlighting the impact of news events on stock prices.
Analysts offered varied perspectives on the market's outlook. Nagaraj Shetti of HDFC Securities highlighted the underlying weakness in the Nifty's trend, suggesting that a reversal pattern might form around the 22,800 support level. He posited that a confirmed reversal could trigger a sizable upside bounce. Om Mehra of SAMCO Securities maintained a more cautious stance, emphasizing the bearish broader trend until a decisive close above 23,500 is achieved. However, Mehra also noted a potential short-term rebound indicated by hourly charts, with a break above 23,150 potentially leading to a move towards the 23,320–23,400 range. Rupak De of LKP Securities shared a similar view, suggesting a potential recovery towards 23,500–23,600 in the near term, contingent on the previous low of 22,786 not being decisively broken. Devarsh Vakil of HDFC Securities observed a double bottom formation around 22,800, strengthening the argument for potential short-term recovery. He also noted that the 5-day EMA at 23,255 represented immediate resistance.
The Nifty Bank index also showed mixed signals, closing slightly up at 49,479.45 (0.15%). Despite the slight increase, the index remained below key moving averages, indicating a need for a more decisive recovery. The index's position above the 23.6% Fibonacci retracement level at 49,270 offered some short-term support. Analysts, similar to those analyzing the Nifty, offered mixed perspectives on the short-term outlook. Om Mehra of SAMCO Securities identified a positive setup in the hourly chart, suggesting a potential move towards 50,150 unless 48,730 is breached. Overall, the short-term trend was considered neutral to slightly negative, but a pullback was anticipated, provided key support levels held firm. The day also saw significant corporate developments impacting individual stocks. Kotak Mahindra Bank saw the removal of RBI supervisory restrictions, allowing the resumption of business operations. ICICI Prudential Asset Management’s potential listing was announced, with ICICI Bank retaining a majority stake. REC Limited set up a Singapore-based arm for global R&D and talent acquisition. Tata Power Renewable Energy signed an MoU with ONGC for exploring joint opportunities in battery energy storage systems. Finally, the RBI extended the validity of authorization for white-label ATMs until March 31, 2026. These varied corporate events further underline the diverse factors at play in shaping the overall market landscape.
Source: Trade Setup for February 13: Nifty can rebound to 23,600 only on sustaining above a key level