Did Nifty Just Hit a Speed Bump? Or Is a Bigger Roadblock Ahead?

At the close, the Nifty 50 was at 25,198.70 down by 0.32%

September 04, 2024. After a 14-day winning streak that had investors riding high, the Nifty 50 hit a wall. Wednesday was no ordinary day for this key benchmark of Indian equity markets. The index closed just shy of 25,200, down by 0.32%, as global pressures took their toll. But what’s behind this stumble?

The day started with a cautious tone, as the Nifty opened lower at 25,089.95, mirroring weak signals from global markets. The Indian indices were in the red, and despite an afternoon rally that offered a glimmer of hope, the index couldn’t escape the gravity pull, closing at 25,198.70—a loss of 81.15 points.

Not all was bleak. The pharma, realty, and FMCG sectors showed signs of strength, bucking the trend and posting gains. But the IT and metal sectors weren’t so lucky, as investors seized the opportunity to book profits after the recent rally. Adding to the gloom was weak U.S. manufacturing data, which fueled fears of a global slowdown. A sluggish outlook from China only made things worse, driving oil prices down and further dampening market sentiment.

Technically, this was a critical moment. The Nifty index broke below its 14-day upward trend, finding some support at a historical swing high. This move raises the question: Is this the beginning of a consolidation phase? The market might now dance between 25,080 and 25,250 in the days to come.

But here’s the big question: Will the Nifty regain its lost ground and march upward again, or are we on the brink of a consolidation phase?

Bank Nifty: Down by 0.56%

The Bank Nifty had a challenging start, opening in the red with a 0.56% decline. By the end of the day, it closed at 51,400.25, unable to shake off the downward pressure. Similarly, the BSE Sensex wasn’t spared from the dip, ending the day 0.25% lower at a low of 82,352.64.

In the sectorial front, the pharmaceutical sector has emerged as a clear winner, posting a commendable gain of 0.74%. Leading the charge, Biocon Ltd. surged by an impressive 5.87%, capturing the attention of investors. Granules India Ltd. also made a notable contribution with a 2.78% increase.

On the other side of the spectrum, the IT sector faced a challenging day, ending as the top loser with a decline of 0.94%. Wipro Ltd. bore the brunt of the sell-off, plummeting by 3.06%, while MphasiS Ltd. also experienced a downturn, dropping by 1.44%.

Foreign Institutional Investors (FIIs) have been active, with a total buy value of Rs. 16,585.13 crore and a sale value of Rs. 15,609.67 crore, resulting in a net buying value of Rs. 975.46 crore.

Domestic Institutional Investors (DIIs) recorded a buy value of Rs. 13,583.92 crore and a sale value of Rs. 13,486.57 crore, leading to a net buying value of Rs. 97.35 crore.

Bank Nifty

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

The gainers included AU Bank with a 1.86% increase, HDFC Bank with a 0.23% increase, and Kotak Bank with a 0.07% increase.

On the other hand, the biggest losers in the sector included Federal Bank with a 3.27% decline, Bank of Baroda with a 2.93% decline, Punjab National Bank with a 2.24% decline, Axis Bank with a 1.06% decline, and State Bank of India with a 1.04% decline. These results suggest that most of the banking stocks not performed better for the day.

Gold and Silver Rate (INR) 4th September, 2024

Rupee Gains Ground as Dollar Weakens and Oil Prices Fall

In early trading on Wednesday, the Indian rupee strengthened by 2 paise to 83.96 against the US dollar. This uptick was supported by a weakening dollar on the global stage and a drop in crude oil prices. The dollar index, which measures the greenback’s performance against a basket of six major currencies, slid by 0.14% to 101.67, reflecting diminished dollar strength. Concurrently, Brent crude, the international oil benchmark, fell by 0.62% to $73.29 in futures trade, easing some inflationary pressures.

At the interbank foreign exchange market, the rupee opened at 83.96, showing a slight improvement from its previous close of 83.98. The stability in the rupee’s value amidst these global movements highlights its resilience. The modest rise in the rupee can be attributed to the broader weakening of the dollar and the cooling off in oil prices, which generally reduces import costs and supports the local currency.

In the broader context, the US markets faced a notable sell-off recently, driven by uncertainty surrounding this week’s jobs data. Investors, seeking safety amidst the volatility, contributed to the drop in oil prices. This shift has had a knock-on effect, bolstering the rupee as global investors adjust their portfolios in response to changing economic signals.

As the rupee continues to navigate through these global fluctuations, the key question remains: Will the rupee maintain its upward trajectory, or will shifts in global economic indicators influence its movement in the coming days?

Stocks Highlights

Grasim Industries Ltd. shows a promising 1.91% rise, with its share price reaching Rs. 2,758.50. But behind this modest gain, there’s trouble brewing. The company’s quarterly revenue has taken a steep 10.47% hit—the worst in three years. This dip casts doubt on Grasim’s ability to keep its momentum, especially with a bearish trend possibly on the horizon.

The five-day moving average crossover on September 2, 2024, is a red flag, often followed by a 2.33% drop within a week over the past five years. Adding to the pressure, Grasim has allocated 7.08% of its operating revenues to interest expenses and 6.08% to employee costs for the year ending March 31, 2024, showing signs of operational strain.

Meanwhile, Coal India Ltd. is grappling with its own challenges. The share price has slid by 2.81%, dropping to Rs. 505.00. The 20-day moving average crossover, also seen on September 2, 2024, signals that bears might be taking over, with an average 2.42% decline within seven days.

On the financial side, Coal India’s cash from investing activities has plunged by a staggering 80.85% year-on-year, indicating a significant pullback in reinvestment efforts. Although interest expenses remain below 1% of operating revenues, the company has spent a hefty 34.28% on employee costs, underscoring the weight of its workforce expenses.

Advance Decline Ratio

Today, the advance-decline ratio was 0.85, and the market breadth was negative. The volatility index India Vix increased by 3.86 to settle at 14.38 and the FIIs were net buyers today.

DAILY MARKET ACTION
Advancers – 1230
Decliners – 1455
52Wk High – 155
52Wk Low – 27
High Band Hitters – 105
Low Band Hitters – 57
200d SMA – 22579
50d SMA – 24543
20d SMA – 24743

Top Gainers and Losers Stocks

The top gainers were Asian Paint (+2.50%), Grasim (+1.91%), Hindustan Unilever (+1.71%), UltraTech Cement (+1.23%), and Sun Pharmaceuticals (+1.19%).

The top losers were Wipro (-3.06%), Coal India (-2.81%), ONGC (-2.27%), Hindalco (-1.90%), and LTIM (-1.15%).

Top Gainers and Losers Sectors

The top gainers sector were Pharma (+0.74%), Realty (+0.65%), FMCG (+0.41%), and Media (+0.08%).

The top losers sector were IT (-0.94%), Metal (-0.75%), Oil & Gas (-0.40%), Auto (-0.39%), and Financial Services (-0.37%).

SECTORS – NOTABLE ACTION
PHARMA +0.74%
REALTY +0.65%
FMCG +0.41%
IT -0.94%
METAL -0.75%
OIL & GAS -0.40%

Stocks Ban List

(SEBI) F&O ban list (BALRAMCHIN close at -587.10), (ABFRL close at -310.45), and (HINDCOPPER close at -312.75) 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.

BANDHANBNK, RBLBANK, IDEA, CHAMBLFERT, and SAIL stocks has the possibilities of entrance in the ban list.

Daily Pivots

As per the above pivots data, 25000 to 25300 is the Nifty 50 trading range.

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