Third Day of Negative Closes for Equity Indices Due to Volatility

At the close, the Nifty 50 was at 22,888.15 down by 0.19%

The NSE Nifty 50 commenced the day on a positive note but concluded in the red, marking a 0.19% decline, closing below the 22,900 mark. Tuesday witnessed the benchmark equity indices sustaining a negative trend for the third consecutive session, characterized by high volatility. Profit booking activities and pressure from index heavyweights contributed to the subdued market sentiment. Following three days of record highs, equity markets took a breather, reflecting a temporary pause in bullish momentum.

After reaching record highs in the preceding session, Indian benchmark indices continued in a consolidation phase on May 28. The Nifty closed at 22,888.15, down by 0.19%, indicating a range-bound movement throughout the day. Despite initial gains, the market fluctuated between positive and negative territory, ultimately ending on a negative note due to selling pressure in the final hour of trading. This subdued session reflected a lack of directional movement, with the index hovering within a narrow range.

Heightened market volatility, as indicated by the high India VIX, is expected to persist as the market approaches the upcoming general election results. The uncertainty surrounding the election outcome is likely to contribute to ongoing market fluctuations. However, the underlying earnings growth for the March quarter exceeded expectations, potentially supporting current valuations, which remain moderately above the long-term average.

Defensive sectors such as Pharma, media, financial services, and FMCG demonstrated optimism amidst the market’s subdued performance. However, mid- and small-cap segments underperformed, experiencing a sharp correction in profit booking. Most sectors faced pressure, with realty and energy emerging as the top losers. Despite these challenges, broader market movements played a significant role in restricting index up-moves, with mid and small-caps witnessing notable corrections.

Bank Nifty: Down by 0.28%

The Bank Nifty commenced the trading day on a positive note, opening in the green, but ended with a 0.28% decline, closing in the red at 49,142.15. Similarly, the BSE Sensex witnessed a decline of 0.29%, closing in the red at a low of 75,170.45. Despite the initial optimism, both indices faced downward pressure, reflecting the broader market trend of the day.

In the sectorial front, the pharmaceutical sector experienced notable growth, rising by 0.54%. Among the leading performers in this sector, Glenmark Pharmaceuticals Ltd. surged by 3.71%, reflecting robust investor confidence. Similarly, Divi’s Laboratories Ltd. saw a significant increase, climbing by 3.05%.

Conversely, the realty sector emerged as the top loser, declining by 2.16%. Within this sector, The Phoenix Mills Ltd. recorded a substantial drop, falling by 4.23%. Additionally, Sobha Ltd. experienced a decrease of 4.01%.

Foreign Institutional Investors (FII/FPI) recorded a buy value of Rs. 14,739.43 crore and a sale value of Rs. 14,673.86 crore, resulting in a net value of Rs. 65.57 crore.

On the other hand, Domestic Institutional Investors (DII) registered a buy value of Rs. 13,169.66 crore and a sale value of Rs. 9,937.99 crore, leading to a net value of Rs. 3,231.67 crore.

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, Bandhan Bank with a 0.11% increase, and HDFC Bank with a 0.06% increase.

On the other hand, the biggest losers in the sector included Bank of Baroda with a 2.79% decline, Federal Bank with a 2.29% decline, Punjab National Bank with a 1.35% decline, IndusInd Bank with a 1.03% decline, and IDFC First Bank with a 0.89% decline. These results suggest that most of the banking stocks not performed better for the day.

Indian Rupee Slightly Weaker Amid Dollar Demand from Corporates

The Indian rupee ended slightly weaker on Tuesday, pressured by local corporate dollar demand. The rupee closed at 83.1775 against the US dollar, down from its previous close of 83.13. This decline occurred even as the greenback slipped, aiding most Asian currencies in gaining strength.

The dollar index fell below the 104.5 mark, continuing its losses from Monday. This decline helped most Asian currencies tick up, with the Korean won leading gains at a 0.4% increase. Despite the pressure from importers’ dollar demand, the rupee’s broader bias towards appreciation kept losses contained.

The rupee is expected to hover between 82.90 and 83.30 as India’s national elections on June 4 approach. The performance of Indian equities is anticipated to significantly influence the rupee, particularly as investors position themselves ahead of the election results.

Concurrently, dollar-rupee forward premiums inched up, with the 1-year implied yield rising by 1 basis point to 1.66%. This subtle increase in forward premiums indicates cautious optimism among investors regarding the rupee’s near-term outlook.

Stocks Highlights

Divi’s Laboratories Ltd. share price increased by 3.05%, moving from Rs 4,255.25 to Rs 4,385.00. Despite a modest three-year return of 3.28% compared to Nifty 100’s 53.09%, the stock shows potential with a weekly stochastic crossover on May 24, 2024, indicating a bullish trend. Historically, this signal has resulted in an average price gain of 5.61% within seven weeks over the past decade. Financially, the company has been efficient, spending less than 1% of operating revenues on interest expenses and 13.95% on employee costs as of March 31, 2024.

Adani Ports & Special Economic Zone Ltd. share price declined by 2.17%, dropping from Rs 1,431.65 to Rs 1,400.65. The company announced a dividend of Rs 6.0 per share on May 2, 2024, with a record date of June 14, 2024. Despite the recent drop, the stock has outperformed with a three-year return of 84.46% against Nifty 100’s 53.09%. A weekly stochastic crossover on May 24, 2024, suggests a bullish outlook, typically leading to a 7.77% average gain within seven weeks. The company allocated 10.65% of its operating revenues to interest expenses and 7.1% to employee costs for the year ending March 31, 2024.

Advance Decline Ratio

Today, the advance-decline ratio was 0.41, and the market breadth was negative. The volatility index India Vix increased by 4.32 percent to settle at 24.20 and the FIIs were net buyers today.

DAILY MARKET ACTION
Advancers – 749
Decliners – 1827
52Wk High – 89
52Wk Low – 35
High Band Hitters – 77
Low Band Hitters – 118
200d SMA – 21004
50d SMA – 22362
20d SMA – 22485

Top Gainers and Losers Stocks

The top gainers were Divi’s Laboratories (+3.05%), SBI Life (+2.96%), HDFC Life (+2.44%), Hero MotoCorp (+1.99%), and Grasim (+1.86%).

The top losers were Adani Ports (-2.17%), Power Grid (-1.64%), BPCL (-1.59%), Coal India (-1.53%), and Adani Enterprises(-1.52%).

Top Gainers and Losers Sectors

The top gainers sector were Pharma (+0.54%), Media (+0.31%), Financial Services (+0.08%), and FMCG (+0.02%).

The top losers sector were Realty (-2.16%), Oil & Gas (-1.02%), Metal (-0.52%), Consumer Durables (-0.37%), and IT (-0.34%).

SECTORS – NOTABLE ACTION
PHARMA+0.54%
MEDIA +0.31%
FINANCIAL SERVICES +0.08%
REALTY -2.16%
OIL & GAS -1.02%
METAL -0.52%

Stocks Ban List

(SEBI) F&O ban list (HINDCOPPER open at -371.80 and close at +373.85), (IDEA open at -15.05 and close at -14.55), (BIOCON open at -313.00 and close at +317.75), (GNFC open at +668.80 and close at +670.65), and (PEL open at +833.50 and close at -819.25) 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.

ABFRL, BALRAMCHIN, GMRINFRA, SAIL, ZEEL, IDFCFIRSTB, ASHOKLEY, NMDC, HAL, BSOFT, CANBK, and IEX stocks has the possibilities of entrance in the ban list.

Daily Pivots

As per the above pivots data, 22750 to 23100 is the Nifty 50 trading range.

Read previous -Daily Insights- here
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Nifty Pulls Back from Peak Levels Due to Global Market Weakness
Weekly Trade Ends on High Note Bulls Drive Index to Record Level

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