Bears Tighten Their Grip: What’s Next for the Nifty 50? Is the Index Heading for a Breakdown?

NiftyTrader • October 25, 2024

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Index	Price	Change	% Chg
Nifty 50	24,180.80	-218.60	-0.90%
Nifty MidCap 50	15,419.60	–236.90	-1.51%
Nifty SmallCap 50	8,607.85	-187.35	-2.13%
Nifty Bank	50,787.45	-743.70	-1.44%
Nifty Financial	23,732.70	-121.45	-0.51%
BSE SENSEX	79,402.29	-662.87	–0.83%

At the close, the Nifty 50 was at 24,180.80 down by 0.90%

As the sun rose on October 25, 2024, Indian markets found themselves trapped in a relentless downward spiral. The NSE Nifty 50 opened in the red, down 0.90%, closing at 24,180.80—a disheartening drop below the crucial threshold of 24,200.

With each tick of the clock, selling pressure mounted, culminating in the Nifty’s fifth consecutive session of declines. A chilling atmosphere enveloped Dalal Street as benchmark indices slipped further, erasing over a percent from the Nifty 50 index this week alone. As the day wore on, the Nifty plunged below 24,100 intraday, signaling deeper troubles for investors across the board—except for the FMCG sector, which seemed to weather the storm.

Why is the Nifty breaking down? After a brief pause in its descent, the index decisively fell below 24,350 as optimism waned. Market sentiment turned exceedingly grim, leading many to believe that any potential rallies could quickly be overshadowed by further sell-offs. A slight bounce in the final hour of trading offered only a glimmer of hope, as the Nifty still finished the day down 218.60 points.

The Bears Tighten Their Grip: What’s Next for the Nifty 50?

Analysts are growing increasingly concerned. Following a couple of days of brief consolidation, the bears resumed their relentless assault, threatening to push the Nifty 50 below the August low of 23,894 in the upcoming week. Why this pattern? Amid mixed global cues, the Indian indices opened with promise but quickly turned sour, erasing gains in just one hour.

By noon, the Nifty had plunged further, down 261 points or 1.07% at 24,138.25. No respite seemed in sight. This decline marked the fifth consecutive session of losses, spurred on by lackluster earnings, persistent foreign institutional investor (FII) outflows, and uncertainty surrounding the US elections.

The Cold, Hard Truth: What’s Causing This Market Plunge?

Indian benchmark indices are feeling the heat, with the Nifty trading in deep red territory. The relentless selling pressure has not only affected frontline indices but has also spilled over into broader markets, with mid-cap and small-cap shares facing heavy losses.

The underlying reasons for this market turmoil are multifaceted. Subdued Q2 results are a significant contributor. Revenue growth expectations for the July-September quarter have plummeted, with projections hovering between 5-7% year-on-year—the slowest growth in 16 quarters.

Moreover, FIIs have been relentless, nearing a staggering Rs 1 trillion in selling for October—the highest recorded in a single month. Panic selling among retail investors, coupled with muted earnings growth and cautious guidance from numerous companies, has compounded the turmoil.

Sticky Inflation: Will the RBI Hold the Line?

As if the situation weren’t precarious enough, sticky inflation looms large. Analysts warn that the Reserve Bank of India (RBI) may have to keep interest rates steady for the foreseeable future. What does this mean for demand? The uncertainty, exacerbated by prolonged rains and floods impacting growth during Q2 FY25, creates a challenging landscape for investors.

In a global context, market performance remains mixed, with investors eyeing Japan’s upcoming general election. The Nikkei 225 dipped by 0.6%, while Hong Kong’s Hang Seng rose by 0.5%.

What Lies Ahead? A Potential Pullback or Further Decline?

Despite the bleak outlook, some analysts believe there’s a chance for a minor pullback or sideways consolidation in the coming days. But with the market sentiment swinging on a pendulum of fear and uncertainty, the question remains: Is this the calm before the storm, or are we witnessing the early stages of a deeper market correction?

Stay vigilant and keep a close watch on these unfolding events, as the next few days could shape the trajectory of the Nifty 50 and the broader Indian markets.

Bank Nifty: Down by 1.44%

Today brought yet another red start for Bank Nifty, down 1.44 percent right out of the gate, and despite brief attempts at recovery, it closed deep in the red at 50,787.45. Likewise, BSE Sensex continued its downward spiral, falling 0.83 percent to close at a low of 79,402.29.

In the sectorial front, the Fast-Moving Consumer Goods (FMCG) sector is making waves, experiencing a remarkable rise of 0.88%. This positive momentum can be largely attributed to strong performances from industry leaders like Godrej Consumer Products Ltd., which surged by an impressive 2.94%, and ITC Ltd., which followed closely with a 2.24% gain.

Conversely, the Consumer Durables sector has faced significant headwinds, emerging as the biggest loser with a decline of 2.60%. The downturn in this sector is starkly highlighted by Dixon Technologies (India) Ltd., which suffered a substantial loss of 7.41%, reflecting challenges in supply chain management and rising competition.

Foreign Institutional Investors (FII) continue their selling spree, with a sale value of ₹17,246.59 crore against a buy value of ₹14,209.84 crore, leading to a net outflow of ₹3,036.75 crore.

Domestic Institutional Investors (DII), however, are working to counterbalance the sell-off. With a buy value of ₹15,203.44 crore and a sale value of ₹11,044.15 crore, DIIs contributed a net inflow of ₹4,159.29 crore.

Bank Nifty

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

The gainers included Axis Bank with a 1.85% increase, ICICI Bank with a 0.55% increase, Kotak Bank with a 0.44% increase.

On the other hand, the biggest losers in the sector included IndusInd Bank with a 18.99% decline, AU Bank with a 6.72% decline, IDFC First Bank with a 3.64% decline, Canara Bank with a 3.62% decline, and Punjab National Bank with a 3.00% decline. These results suggest that most of the banking stocks not performed better for the day.

Gold and Silver Rate (INR) 25th October, 2024

22 K Gold / g	₹ 7,295	+ ₹ 10
24 K Gold / g	₹ 7,958	+ ₹ 11
18 K Gold / g	₹ 5,969	+ ₹ 8

Silver / g	₹ 98	– ₹ 4
Silver / kg	₹ 98,000	-₹ 4,000

The Rupee Dips: Is This the Calm Before a Bigger Storm?

The Indian rupee took another hit, falling by 1 paisa to settle at 84.08 against the US dollar—hovering perilously close to its all-time low. What’s driving this decline? A confluence of factors, including a sturdy American dollar and unprecedented foreign fund outflows, are weighing heavily on the domestic currency.

As foreign investors rush to capitalize on potentially better returns from the Chinese market, the Indian equity markets have been thrown into disarray, with benchmark indices plummeting nearly 8% in the last two weeks. This shift raises a critical question: Is the Indian market in for more turbulence?

Investors are navigating treacherous waters, influenced by higher US Treasury yields, concerns over a slower interest rate cut by the Federal Reserve, and an uncertain geopolitical landscape as the US presidential election looms. With these factors at play, caution is the name of the game.

At the interbank foreign exchange market, the rupee opened at 84.07, fluctuating only slightly between 84.07 and 84.09 throughout the session. Ultimately, it settled at 84.08, marking a 1 paisa drop from Thursday’s close. Just a few weeks prior, on October 11, the rupee had already touched its lowest closing level at 84.10.

Market analysts predict a negative bias for the rupee in the days ahead, citing the overall strength of the US dollar and sustained foreign institutional investor (FII) outflows. The USD-INR spot price is expected to trade within a range of ₹83.90 to ₹84.30.

Adding to the tension, the dollar index, which measures the greenback’s strength against a basket of six currencies, edged up by 0.01%, reaching 103.93. Meanwhile, Brent crude, the international benchmark, climbed 0.51% to $74.76 per barrel in futures trade.

With these economic indicators on the move, one question lingers: What’s next for the rupee and the Indian economy? As the global landscape shifts, investors must brace for a potentially volatile ride ahead.

Stocks Highlights

Is ITC Ltd. a Rising Star or Just a Flash in the Pan?

Could ITC Ltd. be the hidden gem investors have been searching for? The stock’s recent climb of 2.24%, with a last traded price of Rs 482.25, raises eyebrows and questions alike. With returns soaring at 99.37% over three years, this performance outshines the Nifty FMCG, which managed a respectable 54.59% during the same period. Even more impressive is its performance against the Nifty 100, where it achieved 99.37% compared to a mere 38.48%.

What’s the secret behind this success? The company operates with a tight financial ship, dedicating less than 1% of its operating revenues to interest expenses while keeping employee costs at 8.65% as of March 31, 2024. This prudent management could be a significant factor driving investor confidence.

IndusInd Bank Ltd.: A Troubled Voyage or a Turnaround in the Making?

What has led IndusInd Bank Ltd. to experience a staggering drop of -18.99% in share price, now resting at Rs 1,037.00? The previous close of Rs 1,280.05 feels like a distant memory, but there’s a silver lining amid the turmoil. The bank reported a YoY increase of 18.41% in its loan book, smashing its 5-year CAGR of 10.67%.

But can this growth counterbalance the downward trend? The bank’s net interest margin has shown a continuous uptrend, reaching 4.0% over the last year. Can IndusInd Bank turn its fortunes around, or is this just the calm before a bigger storm?

Advance Decline Ratio

Today, the advance-decline ratio was 0.18, and the market breadth was negative. The volatility index India Vix increased by 4.74 to settle at 14.63 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 419
Decliners – 2364
52Wk High – 23
52Wk Low – 217
High Band Hitters – 47
Low Band Hitters – 306
200d SMA – 23376
50d SMA – 25128
20d SMA – 24992

Top Gainers and Losers Stocks

The top gainers were ITC (+2.24%), Axis Bank (+1.85%), BEL (+1.55%), Britannia (+1.24%), and Hindustan Unilever (+1.01%).

The top losers were IndusInd Bank (-18.99%), Adani Enterprises (-4.90%), BPCL (-4.82%), Shriram Finance (-3.92%), and Coal India (-3.62%).

Top Gainers and Losers Sectors

The top gainers sector were FMCG (+0.88%), and Pharma (+0.02%).

The top losers sector were Consumer Durables (-2.60%), Oil & Gas (-2.54%), Metal (-2.42%), Media (-2.20%), and Auto (-2.16%).

SECTORS – NOTABLE ACTION
FMCG +0.88%
PHARMA +0.02%
CONSUMER DURABLES -2.60%
OIL & GAS -2.54%
METAL -2.42%

Stocks Ban List

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