Bulls take global cue, slip back into red zone

Mumbai: Indian equities resumed their downtrend on Wednesday, following a rebound the previous day after a four-day losing run, as global markets were weighed down by a stronger dollar and caution ahead of the minutes from the US Federal Reserve's November policy meeting. The threat of lockdowns in European countries as the region reels under a fresh Covid wave also kept sentiment wary.

Foreign portfolio investors (FPIs) continued their selling, pulling ₹5,100 crore out of Indian shares on Wednesday. Domestic institutional purchases to the tune of ₹3,809.6 crore helped cushion the impact.

The Sensex ended 323.34 points or 0.55% down at 58,340.99 and the Nifty fell 88.30 points or 0.5% to 17,415.05. India VIX fell 5% to 17.20. With Wednesday's fall, indices are down 3.6% in the past six trading sessions and over 6% from record high levels hit in mid-October.


"It is a sell-on-rise market," said Abhilash Pagaria, AVP, Edelweiss Alternative Research.

'Short-term Nifty trend remains down'
"FPIs have been consistently selling for the past one-and-a-half months and that is leading to pressure on the market even as HNIs and retail continue to hold on to their bullish bets," he said.

Asian markets were weak with the MSCI All Country Asia Pacific (excluding Japan) index down 0.48%. The Fed will release minutes of its November policy meeting later on Wednesday, potentially giving investors more insight into the central bank's stimulus-tapering plans. European markets rebounded but gains were capped on concerns over the resurgence of infections across the continent. Germany is likely to announce stricter measures on Wednesday after new infections hit highs on Tuesday. France and the Netherlands have also seen a spike in daily Covid cases.

Analysts said the markets are approaching crucial support levels. If the Nifty falls below 17,100, the index could touch 16,500 within a few days, Pagaria said.

"The short-term trend of Nifty continues to be down and there is no confirmation of any significant bottom reversal at the lows," said Nagaraj Shetti, technical research analyst at HDFC Securities. "There is a possibility of further weakness towards 17,200 levels in the short term, before showing another round of minor upside bounce from the lows."

On Wednesday, Maruti Suzuki India fell 2.4% to emerge as the biggest laggard on the Sensex followed by Tata Steel, Tech Mahindra, L&T, Reliance Industries, ITC and Infosys, which fell 1-2%.

Digital payments giant Paytm which had a weak debut last week continued to climb for a second straight day on Wednesday, ending up over 17%.