Market Volatility: Nifty Struggles as Investors Contemplate Gloomy Sentiment. What Lies Ahead for Indian Markets?

At the close, the Nifty 50 was at 24,435.50 down by 0.15%

In a day filled with uncertainty, the NSE Nifty 50 opened in the red, down by 0.15%, and closed lower at 24,435.50, marking a significant shift in market sentiment. Is this the start of a downward trend, or just a temporary setback?

Despite a brief rally that followed a shaky opening, the Indian equity benchmarks ended Wednesday’s session in negative territory. The final hour of trading saw a selling spree that wiped out earlier gains, leaving Nifty 36.60 points lower at close.

A Roller Coaster of Trading

Today’s trading session was anything but stable. The Nifty opened with a gap down, fluctuating wildly throughout the day. After an initial recovery, selling pressure intensified, indicating a struggle to maintain higher levels. The daily and hourly momentum indicators flashed a negative crossover, signaling a potential sell-off.

Mid and small-cap stocks were particularly hard hit, dragging the index lower during the early hours. However, a swift recovery was observed in the IT sector, which emerged as a major contributor to the brief upward movement. Yet, this momentum couldn’t be sustained, leading to a closing price of 24,435.50—a stark reminder of the market’s fragility.

Key Indicators: What’s Next for Nifty?

Market analysts are keeping a close eye on the 24,350 level; a slip below this could drag Nifty down to 24,000 in the near term. Following a significant drop on Tuesday, Nifty found itself in a consolidation phase, showing minor upside recovery before ultimately closing lower. The intraday hurdle around 24,600 proved too steep for the index to overcome.

Despite the volatility, some indicators hinted at a bullish inverted hammer candle pattern, suggesting potential reversal signs, albeit not a classical formation.

Investor Sentiment: A Cautious Outlook

Investor mood has soured amidst tepid earnings reports and knee-jerk reactions from foreign institutional investors (FIIs). This has significantly impacted market sentiment, especially as FIIs recorded a staggering net outflow of ₹3,978.61 crore. In contrast, domestic institutional investors (DIIs) continued their buying spree with a net inflow of ₹5,869.06 crore. Can domestic buying offset the foreign sell-off?

The India VIX, which measures market volatility, climbed 1.31% to 14.59, indicating heightened uncertainty. The upward movement of the US 10-year yield points to a slower pace of rate cuts by the Federal Reserve, potentially affecting sentiment toward emerging markets like India.

A Tough October for Indian Equities

October has proven to be challenging for Indian equities. The month kicked off with optimistic news from China’s stimulus plans, leading to a “Buy China, Sell India” trend. The Nifty has plummeted nearly 7% from its record high of 26,277, with FIIs offloading a staggering USD 10 billion—the highest monthly outflow on record.

As the markets grapple with these developments, the sustainability of any momentum-driven buying remains uncertain. Will investors find footing in this turbulent market, or are we on the brink of further declines? The answers are yet to unfold. Stay tuned for more updates!

Bank Nifty: Down by 0.04%

The Bank Nifty began on a positive note, briefly reflecting optimism, but ultimately closed lower, down 0.04% at 51,239.00. Similarly, the BSE Sensex experienced a slight decline of 0.17%, finishing at 80,081.98, marking a day of turbulence for Indian equity indices.

In the sectorial front, the Information Technology (IT) sector shone brightly, with a remarkable 2.38% gain. Leading the charge was Coforge Ltd., which saw an astounding 11.11% rise, followed closely by Persistent Systems Ltd., climbing 10.94%. 

On the flip side, the Pharma sector experienced a challenging day, emerging as the biggest loser with a decline of 1.56%. Within this sector, Alkem Laboratories Ltd. took the hardest hit, dropping 4.13%, while Lupin Ltd. followed with a loss of 2.91%.

(FIIs) have found themselves on the losing end this trading session. With a buy value of Rs. 14,752.71 crore and a sale value of Rs. 20,437.34 crore, the net outflow stands at a staggering -Rs. 5,684.63 crore.

(DIIs) are making their presence felt with a buy value of Rs. 16,433.67 crore against a sale value of Rs. 10,393.77 crore. This results in a net buying value of Rs. 6,039.90 crore.

Bank Nifty

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

The gainers included AU Bank with a 2.26% increase, Bank of Baroda with a 1.77% increase, Punjab National Bank with a 1.57% increase, HDFC Bank with a 1.26% increase, and Canara Bank with a 0.99% increase.

On the other hand, the biggest losers in the sector included IDFC First Bank with a 2.59% decline, Axis Bank with a 1.21% decline, ICICI Bank with a 1.10% decline, State Bank of India with a 0.66% decline, and Federal Bank with a 0.54% decline . These results suggest that some of the banking stocks performed better for the day.

Gold and Silver Rate (INR) 23rd October, 2024

Rupee Hits Record Low: A Tale of Resilience Amidst Dollar Strength

In a dramatic turn of events, the Indian rupee has slipped to a record closing low against the U.S. dollar, finishing at 84.08. This marks its weakest level ever, slightly down from 84.0775 in the previous session. What does this mean for the Indian economy, and how will it impact your finances?

Despite the rupee’s decline, it has managed to outperform its Asian counterparts, bolstered by strategic dollar sales from state-run banks. While the rupee struggles, Asian currencies have also faced pressure, declining between 0.1% and 0.5% on the day.

What’s Driving the Dollar’s Strength?

The dollar’s ascent has been fueled by rising expectations surrounding the upcoming U.S. presidential election, particularly with Donald Trump’s potential return to power. As investors adjust their strategies, there’s a palpable shift toward anticipating a gradual reduction of interest rates by the Federal Reserve. The dollar index has surged by over 3% this October, peaking at 104.37, its highest since early August. Meanwhile, the 10-year U.S. Treasury yield hit a three-month high of 4.24% on Wednesday.

Experts suggest that a Trump victory, coupled with a “Red Sweep”—where Republicans gain control of Congress—could spell trouble for U.S. bond prices while simultaneously sending the dollar soaring. How will these political developments affect global markets?

As we navigate this volatile landscape, investors are left to ponder: Is this the beginning of a sustained downturn for the rupee, or will it find a way to rebound? The coming weeks will be crucial in determining the fate of the rupee and the broader market. Stay informed and prepared!

Stocks Highlights

Bajaj Finance Ltd.: A Surge to Watch!

Bajaj Finance Ltd. has taken a thrilling leap, with its share price skyrocketing by 4.90%, closing at Rs. 7,004.85, up from Rs. 6,677.90. This remarkable movement is not just a fleeting spike; it signifies a strong annual revenue growth of 32.79%, outpacing its 3-year CAGR of 26.95%. Is this a sign of sustained momentum?

Yet, lurking beneath this impressive performance is a critical insight: the company allocated 34.06% of its operating revenues to interest expenses and 11.64% to employee costs for the year ending March 31, 2024. What does this spending mean for its long-term profitability?

Mahindra & Mahindra Ltd.: A Drop Worth Noting

In contrast, Mahindra & Mahindra Ltd. has experienced a decline of -3.22%, closing at Rs. 2,794.30, down from Rs. 2,887.20. But here’s a startling fact: over the past 19 years, only 1.1% of trading sessions have witnessed declines exceeding 5%. Could this be an anomaly, or a warning signal?

Despite this drop, the company boasted an ROE of 17.02%, surpassing its 5-year average of 11.97%. Is this resilience enough to inspire confidence amid uncertainty? However, the bears seem to have taken control, with a sell signal emerging as the 50-day moving average crossed below. Historically, this has led to an average price decline of -3.37% within 30 days.

Advance Decline Ratio

Today, the advance-decline ratio was 1.30, and the market breadth was positive. The volatility index India Vix increased by 1.31 to settle at 14.59 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 1557
Decliners – 1196
52Wk High – 44
52Wk Low – 154
High Band Hitters – 92
Low Band Hitters – 149
200d SMA – 23349
50d SMA – 25122
20d SMA – 25174

Top Gainers and Losers Stocks

The top gainers were Bajaj Finance (+4.90%), Tech Mahindra (+2.14%), Tata Consumer (+1.78%), Bajaj Auto (+1.75%), and HDFC Bank (+1.26%).

The top losers were M&M (-3.22%), Sun Pharmaceutical (-2.69%), Eicher Motors (-2.07%), Shriram Finance (-1.86%), and Power Grid (-1.84%).

Top Gainers and Losers Sectors

The top gainers sector were IT (+2.38%), Media (+0.33%), Financial Services (+0.22%), FMCG (+0.16%), and Consumer Durables (+0.07%).

The top losers sector were Pharma (-1.56%), Auto (-0.71%), Oil & Gas (-0.27%), Metal (-0.25%), Realty (-0.06%).

SECTORS – NOTABLE ACTION
IT +2.38%
MEDIA +0.33%
FINANCIAL SERVICES +0.22%
PHARMA -1.56%
AUTO -0.71%
OIL & GAS -0.27%

Stocks Ban List

(SEBI) F&O ban list (INDIAMART close at -2485.40), (RBLBANK close at -165.85), (MANAPPURAM close at -146.65), (PEL close at -1044.25), (AARTIIND close at -492.95), (BANDHANBNK close at -182.29), (IEX close at +182.82), (BSOFT close at +601.00), (GNFC close at +632.05), (PNB close at +96.68), (CHAMBLFERT close at -469.85), and (LTF close at +150.16) 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, NMDC, EXIDEIND, GMRINFRA, ESCORTS, CANBK, LICHSGFIN, PVRINOX, and NATIONALUM stocks has the possibilities of entrance in the ban list.

GNFC, PNB, CHAMBLFERT, and LTF 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
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?
A Day of Volatility and Caution—Is Nifty’s Downward Spiral Continuing?

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