Is the Nifty on the verge of a major downturn after breaking below the 20-week EMA? What are the potential consequences if it falls below 24,500?

At the close, the Nifty 50 was at 24,472.10 down by 1.25%

What just happened? The NSE Nifty 50 opened with promise but quickly turned sour, plunging 1.25% to close below 24,500 at 24,472.10. This marks a significant drop of 309 points, as benchmark equity indices faced a wave of selling pressure, driven by broader market weakness and disappointing global cues.

The Road Ahead: Is a Nifty Crash Towards 24,000 Inevitable?

As the Nifty breaks crucial support levels and forms a long bear candle on the daily chart, the sentiment remains weak, particularly while it stays below 24,700. Market participants may lean toward a “sell on rise” strategy until signs of stability emerge.

What’s Behind the Decline?

1. Extended Selling Pressure
   The markets have been plagued by extended selling in broader segments, compounded by underwhelming sector performance and persistent foreign institutional investor (FII) selling. The Nifty has now decisively broken below crucial support levels, signaling potential for further losses.
2. Weak Corporate Earnings
   Weak quarterly earnings reports have left investors rattled. Major companies like Reliance Industries and HDFC Bank contributed to the downturn, raising concerns about the overall health of corporate profitability in India. After years of double-digit growth, the earnings cycle shows signs of slowing down, which has pushed investors toward defensive stocks.
3. Global Market Impact
   Indian equities mirrored declines in global markets, with the MSCI All-World Index falling by 0.2%. Japan’s Nikkei also saw a sharp drop, reflecting a broader trend of global selloffs. As the world reacts to economic signals, India isn’t immune to this volatility.
4. Rising Bond Yields and Strong Dollar
   U.S. bond yields have climbed to multi-month highs, with the 10-year Treasury yield hitting 4.21%. This rise, coupled with a strengthening dollar, typically triggers foreign fund outflows and escalates import costs, ultimately impacting corporate earnings negatively.
5. Geopolitical Uncertainty
   The looming U.S. elections have added to market unease, with concerns that political outcomes could lead to inflationary pressures and prolonged high interest rates, further unsettling investors.
6. Pressure from Foreign Institutional Investors
   The sustained selling by FIIs, reaching Rs 88,244 crores by October 21, has intensified the market’s bearish sentiment. Despite a recent correction, valuations remain higher than historical averages, suggesting that the market may need more than just a rebound to recover sustainably.

The fear index, India VIX, has also seen an uptick, ending 4.21% higher at 14.34 points, indicating rising volatility and uncertainty in the markets.

Expert Insights: Can India and China Coexist?

While global investors adopt a “Sell India, Buy China” approach, some experts argue that both nations can thrive through different growth strategies. China has traditionally focused on manufacturing, while India is becoming the “office of the world,” with a growing share of global workforce in multinational companies.

What’s Next for Investors?

The market’s reaction to these headwinds will be crucial. Will the Nifty find support soon, or are further declines on the horizon? Investors need to remain vigilant, as the current climate suggests that caution and strategic decision-making will be key in navigating this turbulent period.

Bank Nifty: Down by 1.36%

The Bank Nifty opened on a positive note, trading in the green, but soon took a sharp downturn, closing down by 1.36% at 51,257.15. Similarly, the BSE Sensex followed suit, declining 1.15%, and ending the day in the red at a low of 80,220.72.

A Dark Day for the Markets—there are no gainers to be found across the sectoral landscape. It’s a sea of red, with Realty taking the hardest hit, emerging as the top loser with a sharp drop of 3.38%.

Realty Stocks in Free Fall
Leading the losses within the realty sector, Raymond Ltd. plunged by a staggering -5.68%, followed closely by DLF Ltd., which lost -5.21%.

FIIs recorded a buy value of Rs. 15,579.80 crores but faced an overwhelming sale value of Rs. 19,558.41 crores, leading to a net outflow of Rs. 3,978.61 crores.

DIIs displayed a contrasting approach, with a buy value of Rs. 16,865.80 crores against a sale value of Rs. 10,996.74 crores. This resulted in a net inflow of Rs. 5,869.06 crores.

Bank Nifty

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

The gainers included ICICI Bank with a 0.74% increase.

On the other hand, the biggest losers in the sector included Punjab National Bank with a 7.09% decline, Canara Bank with a 5.99% decline, Bank of Baroda with a 5.03% decline, AU Bank with a 4.19% decline, and IDFC First Bank with a 3.14% decline . These results suggest that almost all of the banking stocks not performed better for the day.

Gold and Silver Rate (INR) 22nd October, 2024

Stocks Highlights

Is ICICI Bank Ltd. Riding the Bullish Wave or Facing a Hidden Storm?

In a surprising turn of events, ICICI Bank Ltd. saw its share price climb by 0.74%, rising from the previous close of Rs. 1,259.05 to a last traded price of Rs. 1,268.35. But is this just the calm before the storm?

A Thriving Loan Book Growth: A Beacon of Hope or Just Numbers?
The bank has reported a staggering YoY increase of 16.32% in its advances, outpacing its 5-year CAGR of 12.29%. This significant growth begs the question: Can ICICI Bank maintain this momentum, or will it face unforeseen hurdles ahead?

Net Interest Margin: The Steady Ascent Continues
For the past three years, the company has successfully expanded its net interest margin, achieving a margin of 3.61% last year. But can this upward trend continue, or are there lurking challenges that might disrupt this stability?

Falling NPA: A True Reflection of Financial Health?
The bank has reported a continuous decline in its gross NPA and net NPA, which have now fallen to 2.26% and 0.45%, respectively, over the past four years. While these numbers appear promising, one must wonder: What lies beneath the surface?

Is Bharat Electronics Ltd. in Trouble or Just Adjusting Its Strategy?

In stark contrast, Bharat Electronics Ltd. experienced a notable drop of 3.79% from its previous close of Rs. 282.30, with the last traded price sitting at Rs. 271.60. This sudden decline raises eyebrows and questions alike.

Zero Debt Burden: A Blessing or a Curse?
For the last five years, the company has proudly held a zero debt status. But is this really a mark of financial strength, or does it signal a potential stagnation in growth opportunities?

Employee & Interest Expenses: Are They in Check?
In the fiscal year ending March 31, 2024, Bharat Electronics spent less than 1% of its operating revenues on interest expenses, with 12.28% directed toward employee costs. This strategic allocation raises a crucial question: Is the balance right, or could it hinder future performance?

Sell Signal: Are the Bears Back in Control?
A 20-day moving crossover emerged yesterday, signaling a potential shift in market sentiment. Historically, this has led to an average price decline of 3.72% within seven days. Will history repeat itself, or can the company rally against the odds?

Advance Decline Ratio

Today, the advance-decline ratio was 0.11, and the market breadth was negative. The volatility index India Vix increased by 4.21 to settle at 14.34 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 281
Decliners – 2535
52Wk High – 49
52Wk Low – 157
High Band Hitters – 50
Low Band Hitters – 330
200d SMA – 23335
50d SMA – 25120
20d SMA – 25249

Top Gainers and Losers Stocks

The top gainers were ICICI Bank (+0.74%), Nestle India (+0.10%), Infosys (+0.04%).

The top losers were BEL (-3.79%), M&M (-3.63%), Coal India (-3.36%), Adani Enterprises (-3.29%), and SBIN (-2.97%).

Top Gainers and Losers Sectors

The top losers sector were Realty (-3.38%), Metal (-3.00%), Media (-2.55%), Auto (-2.47%), Consumer Durables (-2.38%).

SECTORS – NOTABLE ACTION
REALTY -3.38%
METAL -3.00%
MEDIA -2.55%

Stocks Ban List

(SEBI) F&O ban list (INDIAMART close at -2503.95), (RBLBANK close at -167.20), (MANAPPURAM close at -139.50), (PEL close at -1025.65), (AARTIIND close at -488.45), (BSOFT close at -576.65), (BANDHANBNK close at -173.80), (IEX close at -179.16), (GNFC close at -634.95), (LTF close at -146.55), (CHAMBLFERT close at -481.30), (PNB close at -94.95), (HINDCOPPER close at -295.05), (GRANULES close at -555.70) (SAIL close at -121.80) and (IDFCFIRSTB close at -68.32) 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, EXIDEIND, NMDC, ESCORTS, GMRINFRA, LICHSGFIN, CANBK, PVRINOX stocks has the possibilities of entrance in the ban list.

CHAMBLFERT, PNB, HINDCOPPER, GRANULES, SAIL, and IDFCFIRSTB stocks has the possibilities of exit from the ban list.

Daily Pivots

As per the above pivots data, 24200 to 24700 is the Nifty 50 trading range.

Read Previous -Daily Insights- here
A Day of Volatility and Caution—Is Nifty’s Downward Spiral Continuing?
Is the Nifty’s three-day plunge signaling a storm ahead or a hidden opportunity? What’s next?

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