The benchmark indices gained sharply in the opening trade on Monday, but failed to sustain gains as investors resorted to profit-booking following a steep rise in the past fortnight.
After climbing to 34,928 in intra-day trade, the Sensex settled at 34,371 — 557 off the day’s high but 83 points more than the previous close.
The Nifty index hit an intra-day high of 10,329 before ending at 10,167, up 25 points, or 0.25 per cent. Subdued opening in the European markets, coupled with weakness in index heavyweights — such as Reliance Industries, HDFC Bank, and ITC weighed — on the performance. Shares of Reliance Industries hit an all-time high of Rs 1,624 an intra-day basis but ended at Rs 1,570, down 0.67 per cent from its previous close. Shares of HDFC Bank fell 1.9 per cent; ITC declined 1.1 per cent.
“The US markets had rallied on Friday which led to positive sentiment among global bourses. However, we did not see any follow-up move and the index gradually gave up all the opening gains. But, there is no sign of a change in momentum,” said Ruchit Jain, senior analyst-technical and derivatives, Angel Broking.
Since May 18, the benchmark indices have rallied 15 per cent. The sharp upmove has been fuelled by aggressive stimulus measures announced by global central banks. Foreign portfolio investors (FPIs) have been aggressive buyers over the past fortnight. On Monday, they were net buyers to the tune of Rs 813 crore, even as domestic institutional investors (DIIs) sold shares worth Rs 1,238 crore.
“Monetary policies globally have remained expansionary, which is supportive of risk assets. The US Fed is ramping up asset purchases. Similarly, the UK sovereign yields indicate negative interest rates are imminent. The Bank of Japan and the European Central Bank will also persist with balance-sheet expansion,” said Amar Ambani, senior president & institutional research head, YES Securities.
But players said while global liquidity will continue to support the markets, investors have to be cautious given the rising number of Covid-19 cases.
“The recent rally is based on expectations of economic recovery after easing of lockdown measures. In India, cases continue to rise and the markets seem to be ignoring this, for the time being, giving priority to the news of the economy opening up,” said Vinod Nair, head of research, at Geojit Financial Services.
Despite the markets ending flat, the market breadth was strong with 1,809 stocks ending with gains and only 862 ending with losses on the BSE. The broader market outperformed, with the Nifty Smallcap 100 jumping 1.23 per cent, while the Nifty Midcap 100 logging a 0.5 per cent gain.