Sharp Sell-Off in Indian Equity Indices Post Fitch Ratings’ US Credit Downgrade

NiftyTrader • August 2, 2023

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Index	Price	Change	% Chg
Nifty 50	19,526.55	–207.00	-1.05%
Nifty Bank	44,995.70	–596.80	-1.31%
BSE SENSEX	65,782.78	–676.53	–1.02%

At the close, the Nifty 50 was at 19,526.55 down by 1.05%

In the dynamic financial landscape, today’s NSE Nifty 50 performance draws significant attention. Commencing the session on a downtrend, the index experienced a decline of 1.05 percent, ultimately ending in the red zone. As the closing bell rang, the Nifty found itself positioned below the critical 19600 mark.

Indian shares experienced a decline on Wednesday, influenced by a widespread slump across various sectors. This downward trend followed suit with global markets as weak economic data from the United States, euro zone, and China instigated caution among investors, dampening risk sentiment.

The Asian markets also witnessed a slide, mirroring the weak performance of Wall Street and European stocks overnight, primarily driven by concerns over rising interest rates attributed to the tightness in the US labor market.

Adding to the prevailing worries, Fitch’s downgrade of the US long-term debt rating due to fiscal concerns and reports of sluggish factory activity in China and euro zone further contributed to the negative sentiment among investors.

Bank Nifty: Down by 1.31%

The Bank Nifty and BSE Sensex experienced bearish trends. Commencing the session on a negative note, the Bank Nifty witnessed a 1.31 percent decline, ultimately closing in the red zone at 44,995.70. Similarly, the BSE Sensex also faced a 1.02 percent downturn, leading to a closing value of 65,782.78, which stands notably low.

A sudden and significant sell-off in both Asian and European markets has spurred investors to capitalize on the recent market upswing. Foreign institutional investors (FIIs) appear to have offloaded local equities following the record-breaking rally witnessed last month. The surge in the dollar index and rising US bond yields in recent sessions is now making its presence felt in emerging markets, and India is no exception.

In today’s market, the Metal sector witnessed a downturn, with all sectors closing in the red. Jindal Steel & Power Ltd. experienced a significant loss of -4.01%, followed by National Aluminium Company Ltd. with a decline of -3.61%, and Tata Steel Ltd. with a decrease of -3.25%. Metal emerged as the top loser, falling by 2.02%.

Bank Nifty

The Nifty Banking sector had some gainers and some losers for the day.

The gainers included AU Bank with a 0.60% increase. On the other hand, the biggest losers in the sector included Bank of Baroda with a 3.11% decline, Punjab National Bank with a 2.77% decline, State Bank of India with a 2.13% decline, Federal Bank with a 1.67% decline, and Axis Bank with a 1.56% decline. These results suggest that some banking stocks not performed better for the day.

Buzz

Indian Rupee Faces Largest Single-Day Decline in Two Months on Weak Risk Appetite.

The Indian rupee encountered a substantial decline on Wednesday, marking its most significant single-day loss in nearly two months, as a result of a downturn in risk appetite and heightened demand for dollars from importers.

The currency concluded at 82.5825 against the dollar, contrasting with the previous day’s rate of 82.2550.

In intraday trading, the rupee experienced a dip to 82.6150 due to dollar purchasing by select state-run banks, potentially on behalf of importers.

Moreover, potential outflows of foreign investments in the equity market also exerted pressure on the rupee, pushing it closer to its critical support level of 82.60.

The Reserve Bank of India (RBI) is likely to exercise cautious intervention and could wait for factors such as oil prices and global economic conditions to align before considering offloading dollars. This approach is aimed at preventing further depreciation of the Indian rupee.

Buzzing

The share price of Divi’s Laboratories Ltd. showed a positive movement of 1.52%, rising from its previous close of Rs 3,639.50 to reach Rs 3,694.95. Over the past three years, the stock delivered a return of 39.1%, compared to Nifty 100’s 75.35% return. A 20-day moving crossover occurred recently, with a historical average price decline of -2.86% within seven days of this signal in the last five years. The company experienced a 10.6% decrease in sales and reported revenue contraction for the first time in three years. Additionally, the company declared a dividend of Rs 30.0 per share on 22 May 2023, with a record date set for 11 Aug 2023.

Hero MotoCorp Ltd. observed a -3.49% decrease in share price from its previous close of Rs 3,102.10, resulting in a last traded price of Rs 2,993.90. Over the past three years, the stock exhibited a return of 15.9%, while Nifty 100 outperformed with a return of 75.35%. A 14-day moving crossover signal appeared recently, and historically, there has been an average price decline of -2.42% within seven days of this signal in the last five years. Hero MotoCorp achieved an annual revenue growth rate of 15.35%, surpassing its 3-year CAGR of 4.97%. Notably, over the last 18 years, only 1.02% of trading sessions witnessed intraday declines higher than 5%.

Advance Decline Ratio

Today, the advance-decline ratio was 0.93, and the market breadth was negative. The volatility index India Vix increased by 9.67 percent to settle at 11.28 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 5169
Decliners – 5541
52Wk High – 117
52Wk Low – 17
High Band Hitters – 66
Low Band Hitters – 49
200d SMA – 18206
50d SMA – 19094
20d SMA – 19623

Top Gainers and Losers Stocks

The top gainers were Divi’s Laboratories (+1.52%), Nestle India (+0.94%), Hindustan Unilever (+0.82%), Asian Paint (+0.54%), and Tech Mahindra (+0.35%).

The top losers were Hero MotoCorp (-3.49%), Tata Steel (-3.25%), Tata Motors (-3.21%), Bajaj Finserv (-3.02%), and NTPC (-2.64%).

Top Gainers and Losers Sector

The top losers sectors were Metal (-2.02%), Auto (-1.66%), Media (-1.57%), Realty (-1.49%) and Oil & Gas (-1.38%).

The Nifty Midcap 50 was down by 1.40 percent, while the Nifty Small Cap 50 was down by 1.63 percent on the day.

The Nifty Midcap 50 index currently closed at 10,643.20, while the Nifty Small Cap 50 index currently closed at 5,254.60.

SECTORS – NOTABLE ACTION
METAL -2.02%
AUTO -1.66%
MEDIA -1.57%

Stocks Ban List

(SEBI) F&O ban list (HINDCOPPER open at +150.90 and close at -146.85), (PEL open at -1004.95 and close at -947.15), and (IBULHSGFIN open at -141.50 and close at -149.05) are not currently on the stock exchange.

The Securities and Exchange Board of India (SEBI) has banned HINDCOPPER, PEL and IBULHSGFIN from trading in the futures and options (F&O) segment of the stock exchange.

A stock enters the Ban List if its MWPL is above 95%. Implying that, Ban List shows the Futures and Options (FnO ) stocks whose combined open interest in all FnO contracts for a given period crosses 95% of Market-Wide Position Limit.

CANFINHOME, MANAPPURAM, and ZEEL stocks has the possibilities of enterance in the ban list.