Consolidation becomes need of hour for markets; market turnover dips with new margin norms coming into effect

In the last trading session, Sensex & Nifty logged fresh all-time highs on a closing basis, aided by strong fund flow from the FIIs.

After recording an inflow of a whopping Rs 65,317.13 crore in the month of November, the strong buying by FIIs showed no signs of abating during the first session of December as they turned net buyers to the tune of Rs 3,242 crore. Overall, the market breadth was healthy and participation was seen across the board. However, early signs from SGX Nifty indicate that Nifty could witness a soft start. SGX Nifty trades at 13,129 levels, down by 22 points.  

Meanwhile, the new upfront margin collection norms came into the effect from December 1. The cash market turnover stood at Rs 63,241.69 crore as against the daily average turnover of Rs 66,864 crore in the month of November. The market participants and brokers had already anticipated this.

Asian indices were seen trading with modest losses on Wednesday morning despite a strong close on Wall Street overnight. Hong Kong’s Hang Seng was down by 0.41 per cent and China’s Shanghai Composite slipped 0.33 per cent. Meanwhile, Japan’s Nikkei dropped 0.23 per cent, ahead of the release of economic data (November Consumer Confidence Index).  

Indian markets started December month on a robust note and logged gains of over a per cent. Sensex surged past the 44,650 mark while Nifty closed above the 13,100 mark. The advance-decline ratio was strongly in favour of the advancers as 1,288 stocks advanced as against 650 stocks decliners. The broader indices moved in-line with the benchmark as Nifty Mid-cap and Small-cap added 0.96 per cent and 0.91 per cent, respectively. On the sectoral front, Nifty Realty, Nifty PSU Bank and Nifty IT were the top gainers.  

The final month of 2020 began on a cheerful note on Wall Street as Nasdaq and S&P 500 closed a new record high. Meanwhile, Dow added 0.6 per cent to settle at 29,823.92 levels.

The key catalyst for the stocks was the statement of Federal Reserve Chairman Jerome Powell before the Senate Banking Committee as he reiterated the importance of fiscal relief and called the economic outlook “extraordinarily uncertain”.

This was backed by an uptick in the construction spending as it rose by 1.3 per cent MoM in October. On a stock-specific action, video conferencing software company, Zoom  crashed 15 per cent despite the company beating the third quarter earning expectation. It was mainly due to the market participants’ expectations that the pace of growth could slow down in the coming quarters. European indices too ended the day on a prosperous note on the back of strong economic data.