Stock Market: Late selloff drags indices; PSU banks brace for rally

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By S Jha

New Delhi, July 12: The indices after sideways mode slumped after 3 PM as part of a pattern, as traders squared off their positions in their bid to stay on the sidelines to watch the cues emerging from the US as key indicators are expected over the next two days. Nifty has gone far off the psychological level of 19500 and Bank Nifty has also gone further down from 45,000 level.

The selloff in the indices take them to the weekly expiry of the option contracts of key indices, and traders are betting on a sideways actions on the street. The fall in the indices could have been much more if not for the heavyweight Reliance Industries throwing the safety net. Reliance Industries has been trending from the level of Rs 2400, and the oil and gas behemoth during the day even touched the level of Rs 2800.

HDFC twins’ merger cut off day also coincided with today’s actions on the street, and the event may also have bearing on the movement of the indices. The foreign institutional investors after pouring funds aggressively in the cash market sold heavily, netting over Rs 1200 crores on the sell side. The institutional action apparently came at 3 PM to knock out the indices.

However, the dream run of the defence and select other stocks continued on the bourses. Prime Minister Narendra Modi is heading to Paris tomorrow, and there is a buzz around Mazgaon Dock Shipyard bagging Rafale projects. The company already has a bloated order book, and more projects for submarines could further bring revenue stream to the scrip. It added another eight per cent on Wednesday, swelling by over 33 per cent in the last five days.

Data Patterns, another private sector defence scrip, finally crossed the psychological level of Rs 2000 with gains of over three per cent on Wednesday. Zen Technology, an anti-drone and shooting simulation firm, trended further on the back of bagging orders of over Rs 160 crores from the Ministry of Defence. It zoomed by 20 per cent to lock in the upper circuit.

The small size IT firms were also trending on Wednesday. R Systems, a Noida-based firm, rose sharply with gains of 13 per cent to close at Rs 479. It may be recalled that R Systems had spent more than a year in the range of Rs 320 and Rs 390 to finally break out to spurt full steam. Nucleus Software too gained 10 per cent on Wednesday.