Indices end lower despite Asian rally; Nifty@26,800 still in play: Analysts

Mumbai: India's benchmark indices hit fresh highs on Monday but failed to hold on to gains and closed lower, ignoring the upbeat cues from Asia. The NSE Nifty ended at 26,250.30, down 78.25 points or 0.3%, after touching a record 26,373.2 intraday. The BSE Sensex hit an all-time high of 85,883.5 before settling at 85,439.6, a decline of 322.4 points or 0.4%. Both indices had risen as much as 0.2% earlier in the day.

Asian markets rallied, shrugging off geopolitical developments with the US capturing Venezuelan president Nicolas Maduro. Optimism around technology and AI drove gains in South Korea, and Taiwan which surged 3.4% and 2.6%, respectively. Japan advanced 3%, while China added 1.4%. Hong Kong ended marginally higher. Brent crude futures rose 0.4% to $61.10 a barrel.

"The markets did not react to the US-Venezuela concerns since crude oil prices didn't spike as expected; however, there was profit-taking at higher levels after Nifty hit a record high during the trading session," said Gaurav Sharma, head of research, Globe Capital. Sharma said HDFC Bank's decline contributed the most to the index fall. The stock fell 2.3%. The Nifty IT index fell 1.4%, emerging as the biggest sector loser. HCL Technologies, and Infosys dropped over 2% each.

"There was some volatility after Friday's strong closing, which led to selling pressure at higher levels," said Nilesh Jain, head of derivatives and technical research, Centrum Broking. "However, the undertone remains bullish with Nifty expected to rise to 26,800 levels."

Broader markets were mixed. The Nifty Mid-cap 150 eased 0.1%, while the Small-cap 250 gained 0.3%. Of 4,471 stocks traded on the BSE, 1,672 advanced and 2,603 declined. Both mid-cap and small-cap indices rose about 2% last week.

Foreign portfolio investors sold shares worth ₹36.3 crore on Monday, while domestic institutions bought ₹1,764.07 crore. FPIs have offloaded ₹3,077.1 crore so far in January. Volatility ticked higher, with the Volatility Index (VIX) climbing 6.1% to 10.02.

Jain said the index had been at an all-time low of 9, making Monday's pullback anticipated. "The January series began on a strong note and the roll-over data indicates room for upside, but it may not be one-sided," he said.