Volatility Strikes Indian Benchmark Equity Indices Plunge Amidst Broad-Based Selling

At the close, the Nifty 50 was at 21,513.00 down by 0.91%

Today, the NSE Nifty 50 index kicked off positively but ended on a challenging note, witnessing a 0.91 percent decline, closing below the significant 21550 mark. This descent was influenced by weak global cues, impacting domestic equity benchmarks on January 8. The impending Q3 earnings season compounded investor nervousness, coupled with profit booking, dampening market sentiment.

In 2023, the Nifty experienced a robust rally, surging nearly 14% from its October lows. However, the impetus behind this upward trajectory seems to be fading. The primary challenge emerges from the weakening US market, displaying signs of vulnerability. Concerns have arisen about a potential rate cut in March, as the labor market’s resilience and lower-than-expected unemployment data challenge market forecasts. The likelihood of controlling inflation suggests a pause in the rate hiking cycle, hinting at an impending pivot by the Federal Reserve.

As optimism surrounding rate cuts dwindled due to robust US non-farm payroll data and the consequent rise in the US 10-year yield, extensive offloading followed suit. Investor sentiment is expected to revolve around the upcoming results season. Despite subdued prospects in the IT sector, the overall earnings growth outlook remains positive, foreseeing promising double-digit figures. Amidst uncertainties, investors prepare for volatility, closely monitoring global economic indicators to navigate these turbulent market conditions.

Bank Nifty: Down by 1.47%

Today’s trading session commenced with the Bank Nifty facing a notable 1.47% decline, ultimately closing at 47,450.25. In parallel, the BSE Sensex mirrored this downturn, experiencing a 0.93% drop, concluding at a low of 71,355.22. Both indices ended the day in negative territory, reflecting a challenging market landscape.

In the sectorial domain, the Real Estate market stood out, showcasing a 0.13% increase in its performance. Macrotech Developers Ltd. emerged as a frontrunner with an impressive growth of 2.68%, followed by Sobha Ltd. demonstrating substantial progress with a gain of 2.19%.

Conversely, the FMCG sector encountered a downturn, marking a significant decline of 1.72%. Notably, Marico Ltd. experienced a substantial plummet of -3.99%, alongside Godrej Consumer Products Ltd. witnessing a decline of -3.68%.

Examining institutional activities in the Indian financial markets, Foreign Institutional Investors (FII/FPI) engaged in transactions with a buy value of Rs. 10,246.47 crore and a sale value of Rs. 10,230.44 crore, resulting in a marginal net value of Rs. 16.03 crore. Conversely, Domestic Institutional Investors (DIIs) recorded transactions amounting to a buy value of Rs. 9,837.48 crore and a sale value of Rs. 9,681.52 crore, culminating in a net value of Rs. 155.96 crore. These institutional activities showcase a delicate balance and nuanced movements within the market landscape.

Bank Nifty

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

The gainers included AU Bank with a 0.24% increase. On the other hand, the biggest losers in the sector included Bandhan Bank with a 7.77% decline, Bank of Baroda with a 4.07% decline, Federal Bank with a 2.39% decline, Punjab National Bank with a 2.21% decline, and State Bank of India with a 2.19% decline. These results suggest that some of the banking stocks not performed better for the day.

Rupee Gains Traction Amid Domestic Market Positivity, Dollar Strength and Oil Volatility

The Indian rupee displayed resilience, marking a 9-paise surge to reach 83.06 against the US dollar in early Monday trading. This upward trend was propelled by favorable domestic equity markets and increased foreign fund inflows, fostering a positive sentiment for the rupee’s value.

However, challenges persisted as the domestic currency contended with the influence of a robust American currency and the inherent volatility stemming from fluctuating crude oil prices. These factors played a pivotal role in the rupee’s valuation.

Operating within the interbank foreign exchange domain, the rupee commenced trading at 83.09, briefly reaching a peak of 83.04 before stabilizing at 83.06 against the greenback, marking a 9-paise uptick from its preceding closure. In the prior trading session on Friday, the rupee settled at 83.15 against the dollar.

Simultaneously, the dollar index, a barometer of the greenback’s strength against six major currencies, showed a marginal increase of 0.09%, resting at 102.22 on Monday. In contrast, Brent crude futures, the global benchmark for oil pricing, experienced a decline of 1.12%, settling at $77.88 per barrel.

The intricate interplay between domestic and global economic variables, including equity market performances, currency fluctuations, and oil price movements, significantly influences the rupee’s standing against the US dollar. Monitoring these factors remains crucial for investors and businesses to anticipate potential impacts on trade and financial decisions.

Stocks Highlights

Adani Ports & Special Economic Zone Ltd. exhibited a commendable uptick, with its share price escalating by 1.57% from its previous close of Rs 1,154.25 to reach Rs 1,172.40. Impressively, the company’s annual revenue growth of 23.86% outperformed its 3-year Compound Annual Growth Rate (CAGR) of 17.53%, reflecting robust financial performance.

However, caution flags appear as sell signals emerged, indicating a potential market downturn. The weekly stochastic crossover on Jan 05, 2024, suggests bearish trends. Historical data shows an average price decline of -6.25% within 7 weeks following such signals in the past decade. Additionally, notable portions of operating revenues—11.33% towards interest expenses and 5.65% towards employee costs as of March 31, 2023—demand careful consideration.

Conversely, UPL Ltd. faced a decline, with its share price plummeting by -3.44% from Rs 581.25 to Rs 561.25. The company suffered a significant setback, reporting a loss of Rs 189.0 crore in the quarter ending September 30, 2023, after three consecutive profitable quarters.

Similar sell signals were observed, indicating potential bearish market movements. The weekly stochastic crossover on Jan 05, 2024, historically precedes an average price decline of -7.33% within 7 weeks. Notably, the company allocated 5.53% towards interest expenses and 9.44% towards employee costs as of March 31, 2023, reflecting financial challenges.

Advance Decline Ratio

Today, the advance-decline ratio was 0.58, and the market breadth was negative. The volatility index India Vix increased by 7.06 percent to settle at 13.52 and the FIIs were net buyers today.

DAILY MARKET ACTION
Advancers – 936
Decliners – 1618
52Wk High –  217
52Wk Low – 8
High Band Hitters – 172
Low Band Hitters – 58
200d SMA – 19272
50d SMA – 20426
20d SMA – 21425

Top Gainers and Losers Stocks

The top gainers were Adani Ports (+1.57%), ONGC (+0.55%), NTPC (+0.52%), Sun Pharmaceutical (+0.52%), and Hero MotoCorp (+0.52%).

The top losers were UPL (-3.44%), SBI Life (-2.60%), SBIN (-2.19%), M&M (-2.19%), and Tech Mahindra (-2.03%).

Top Gainers and Losers Sector

The top gainers sector were Realty (+0.13%), and Media (+0.08%).

The top losers sector were FMCG (-1.72%), Metal (-1.59%), Financial Services (-1.03%), IT (-0.97%), and Pharma (-0.94%).

SECTORS – NOTABLE ACTION
REALTY +0.13%
MEDIA +0.08%
FMCG -1.72%
METAL -1.59%
FINANCIAL SERVICES -1.03%

Stocks Ban List

(SEBI) F&O ban list (PEL open at -942.85 and close at -926.15), (INDIACEM open at -265.60 and close at -257.55), (CHAMBLFERT open at -375.90 and close at +378.45), (ESCORTS open at -2805.00 and close at +2854.15), (DELTACORP open at -153.00 and close at -150.25), (NATIONALUM open at -128.95 and close at -123.75), (SAIL open at -117.10 and close at -114.30), (GNFC open at -765.00 and close at -741.05), (ZEEL open at -286.10 and close at -278.15), (IEX open at -164.20 and close at -160.90), and (BALRAMCHIN open at -406.30 and close at -395.95) are not currently on 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.

BHEL, INDUSTOWER, ASHOKLEY, BANDHANBNK, and PVRINOX stocks has the possibilities of entrance in the ban list.

Daily Pivots

As per the above pivots data, 21400 to 21700 is the Nifty 50 trading range.

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This article is only for educational purposes and is not an investment advice.