Continuation of Range-Bound Trading. Will the Nifty break free, or is it stuck in a waiting game?

At the close, the Nifty 50 was at 24,641.80 up by 0.13%

The stock market’s suspenseful dance continues, as the NSE Nifty 50 opened green today, climbing up by 0.13% and closing at 24,641.80, but the big question remains: Can it break through this barrier, or is it stuck in a holding pattern?

As Indian equity benchmarks closed marginally higher on December 11, market participants were glued to the upcoming inflation data from both the US and India. Investors are on edge, awaiting the release of critical reports that could dictate the next move. The Nifty gained 0.13% today, but could this be the calm before a storm? Nifty above 24,640—a momentary spike, or the start of something bigger?

“Is the Market About to Make a Bold Move or Stall?”

The US CPI data—a key driver—could shape the Federal Reserve’s decision on interest rates, with an 80% chance of a cut, according to analysts. But will the US consumer prices show persistent inflation that exceeds the Fed’s 2% target? If so, how will this impact global markets? The anticipation is palpable, as the US figures are expected to rise by 0.3% month-over-month and 2.7% year-over-year.

Meanwhile, in India, the CPI data on December 12 will reveal whether retail inflation has eased. With experts predicting a decline to 5.53% for November, investors are bracing for another potential market shift. Could India’s CPI drop spark a rally, or will it cause the markets to tread carefully?

The Quiet Before the Storm—Global Tensions Loom

In the face of mixed global market sentiments, US inflation data will undoubtedly play a pivotal role in determining the fate of emerging markets like India. Defensive sectors, such as FMCG and pharmaceuticals, saw some upticks today, while metals gained thanks to optimism around China’s stimulus measures. But with the US dollar strengthening and bond yields inching upwards, the stage is set for an intense week ahead.

Can the Nifty Break 24,700?

In today’s range-bound market action, the Nifty50 index made a valiant attempt to hit the 24,700 mark, but profit booking led to a pullback, ultimately closing at 24,641.80, just 31.75 points up from the previous session. For four consecutive sessions, the index has remained trapped within a narrow range of 24,500 – 24,800, and market watchers are wondering: Will a decisive break above 24,750 trigger a rally, or will the downside support at 24,500 hold strong?

The Plot Thickens—A Watchful Waiting Game

As we inch closer to the crucial US CPI report, global sentiments remain mixed, and the Indian market continues to reflect this uncertainty. The US Fed’s policy will be closely linked to the US inflation numbers, and a strong move could disrupt foreign investments and cause ripple effects across emerging markets.

Gold Shines Amid Uncertainty—Could This Be a Sign?

Meanwhile, gold prices have surged to over $2730 internationally, and over Rs 78,900 in India. The rally is being driven by a mix of geopolitical tensions, central bank purchases, especially from China, and growing expectations of a US Fed interest rate cut. As the dollar strengthens, gold continues to rise, showing that investors might be seeking safe havens in the midst of an unpredictable economic climate.

What Lies Ahead? The Waiting Game Continues

In a world of market uncertainty, one thing is clear: Nifty50 is standing at a crossroads, and inflation data from the US and India could be the deciding factor. Will the market break through its current range or remain stuck in its tight grip? As the US Fed prepares for its decision and India’s CPI looms, investors will be on edge, waiting for the next big move. Stay tuned—because the story is far from over!

Key Market Movements to Watch:

• Gold prices surge amidst rising geopolitical tensions.
• Nifty50 closes at 24,641.80 (+0.13%)
• US inflation data will be key to Fed policy decisions.
• India CPI report due tomorrow, with expectations of easing inflation.

Bank Nifty: Down by 0.35%

The Bank Nifty opened in the red, down by 0.35%, and closed lower at 53,391.35. This negative movement in the banking index reflects market concern over rising inflationary pressures and global uncertainties. Investors appear cautious, with the banking sector feeling the weight of mixed economic data and expectations of monetary tightening. On the other hand, the BSE Sensex saw a slight uptick, rising by 0.02% and closing in the green at a high of 81,526.14.

On the sectoral front, Consumer Durables emerged as a strong performer, gaining 0.57% overall. Havells India Ltd. led the charge with a notable rise of 2.57%, followed closely by Blue Star Ltd., which gained 2.12%.

In stark contrast, the Media sector was the top loser of the day, down by 0.51%. Within this sector, Zee Entertainment Enterprises Ltd. saw a significant decline of -1.35%, while Nazara Technologies Ltd. also lost -0.99%.

Foreign Institutional Investors (FII) and foreign portfolio investors (FPI) have been net sellers in the market today, with net sales totaling Rs. 1,012.24 crore. Despite a buy value of Rs. 11,528.68 crore, their sale value surged to Rs. 12,540.92 crore.

Domestic Institutional Investors (DII) have demonstrated more confidence in the market, with net buying activity amounting to Rs. 2,007.85 crore. The DII’s buy value stood at Rs. 11,396.21 crore, outpacing their sale value of Rs. 9,388.36 crore.

Bank Nifty

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

The gainers included Federal Bank with a 0.23% increase, and Kotak Bank with a 0.02% increase.

On the other hand, the biggest losers in the sector included Punjab National Bank with a 1.76% decline, Bank of Baroda with a 0.95% decline, Canara Bank with a 0.90% decline, IDFC First Bank with a 0.88% decline, and State Bank of India with a 0.66% decline. These results suggest that most of the banking stocks not performed better for the day.

Gold and Silver Rate (INR) 11th December, 2024

Is the Rupee on the Brink of a Breakdown? The Latest Data Reveals a Bleak Outlook

The Indian rupee has hit a new lifetime low, sliding to 84.8650 against the U.S. dollar, before recovering slightly to close at 84.83 on Wednesday. This marks a sharp decline, driven by a weakening Chinese yuan and increased dollar bids in the non-deliverable forwards (NDF) market. The rupee’s poor performance highlights ongoing challenges for the Indian economy, with global factors contributing significantly to its depreciation. Domestic concerns, such as slowing economic growth and expectations of rate cuts by the Reserve Bank of India (RBI), have only added to the pressure.

The Rupee Struggles Amid Global Weakness
The rupee’s drop reflects a broader trend in the region, with the Chinese yuan also tumbling by 0.4% to 7.28, as reports surfaced that China may allow its currency to weaken further next year to cope with higher tariffs. This news has weighed heavily on most Asian currencies, including the rupee. The weakening yuan is a major factor influencing currency markets in Asia, with the Indian rupee following suit. Despite this, the RBI stepped in to limit further losses, engaging in dollar-selling intervention through state-run banks, which helped the rupee close marginally higher. However, the RBI’s intervention can only provide temporary relief and cannot reverse the underlying pressures on the rupee.

Slower Growth and Rate Cut Expectations Add Pressure
The Indian rupee’s weakness in December, having fallen 0.4%, outpaces that of many regional currencies. The market is grappling with the twin fears of slowing economic growth and the anticipated appointment of a new RBI chief, leading to growing speculation about possible rate cuts next year. Concerns about inflation and domestic growth slowing further are making the rupee more vulnerable. These factors have added further pressure on the rupee, fueling expectations that the local unit may weaken even more in the coming months, especially if growth continues to disappoint. The market is wary of a potential slowdown in foreign investments, which could exacerbate the rupee’s downward trend.

Eyes on U.S. Inflation Data and Its Impact on the Rupee
Meanwhile, the U.S. dollar index was up by 0.2% to 106.5, ahead of the crucial U.S. inflation data release later on Wednesday. Traders are closely watching this data, as it could provide insight into the future path of Federal Reserve policy rates. If the U.S. inflation figure comes in higher than expected, the Federal Reserve may tighten rates further, strengthening the U.S. dollar and putting additional pressure on the rupee. A stronger dollar typically weakens emerging market currencies, and this trend could continue, leaving the rupee exposed to further losses.

Forward Premiums Soar Amid Heightened Uncertainty
In a further sign of uncertainty, dollar-rupee forward premiums have surged, with the 1-year implied yield rising 11 basis points to 2.17%. This indicates that traders are increasingly betting on a weaker rupee over the next year, as expectations of further dollar strength continue to rise. Forward premiums serve as a barometer for market sentiment, and the surge suggests that traders are preparing for further rupee depreciation. It’s also a sign of worsening market expectations regarding the Indian currency’s future performance.

Stocks Highlights

Trent Ltd. surged 2.50% today, with its stock price rising from the previous close of Rs 6,878.05 to Rs 7,050.00. But, before you get too excited, here’s what you need to know:

• Intraday Fact Check: In the past 20 years, only 1.78% of trading sessions for Trent Ltd. saw a drop of more than 5%. So, if you’re thinking about volatility, remember that major intraday declines are rare.
• Impressive ROE Performance: Trent Ltd. has outperformed expectations with a Return on Equity (ROE) of 36.55% for the year ending March 31, 2024. This is significantly higher than its 5-year average of 14.67%, signaling solid performance and strong shareholder returns.
• Sell Signal Alert: Here’s the twist. The 50-day moving average crossover appeared yesterday, often seen as a bearish signal. Historically, in the last 5 years, stocks that triggered this pattern saw an average decline of -5.36% within 30 days. Could this be a hint of what’s to come?
• Cost Breakdown: Trent Ltd. allocated 2.58% of its operating revenues to interest expenses, and 8.38% towards employee costs for FY2024. These numbers reflect a balanced approach to managing costs.

JSW Steel Ltd. saw its share price drop by -1.48%, closing at Rs 998.00, down from the previous close of Rs 1,012.95. Let’s break it down:

• Intraday Fact Check: In the last 20 years, only 3.31% of trading sessions for JSW Steel saw an intraday gain of more than 5%. This indicates that rapid price movements are infrequent.
• Quarterly Struggles: The company reported a decline in total income for the September 2024 quarter. Total income fell to Rs 39,837 crore, reflecting a -7.59% decrease quarter-on-quarter (QoQ) and a -11.12% drop year-on-year (YoY). Clearly, JSW Steel is facing some challenges on the revenue front.
• Cost Breakdown: For FY2024, 4.63% of JSW Steel’s operating revenues went towards interest expenses, and 2.62% was allocated to employee costs. These costs suggest the company is managing its resources, though the high interest expense is something to keep an eye on.

Advance Decline Ratio

Today, the advance-decline ratio was 1.16 and the market breadth was positive. The volatility index India Vix decreased by 3.70 to settle at 13.27 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 1491
Decliners – 1288
52Wk High – 103
52Wk Low – 13
High Band Hitters – 129
Low Band Hitters – 33
200d SMA – 23756
50d SMA – 24458
20d SMA – 24120

Top Gainers and Losers Stocks

The top gainers were Trent (+2.50%), Bajaj Finance (+2.35%), Britannia (+2.10%), Shriram Finance (+1.90%), and Hero MotoCorp (+1.39%).

The top losers were JSW Steel (-1.48%), Adani Ports (-1.35%), NTPC (-0.88%), SBIN (-0.66%), and Axis Bank (-0.58%).

Top Gainers and Losers Sectors

The top gainer sectors were Consumer Durables (+0.57%), FMCG (+0.42%), Auto (+0.36%), IT (+0.33%), and Realty (+0.18%).

The top losers sectors were Media (-0.51%).

SECTORS – NOTABLE ACTION
CONSUMER DURABLES +0.57%
FMCG +0.42%
AUTO +0.36%
MEDIA -0.51%

Stocks Ban List

(SEBI) F&O ban list (GRANULES close at +585.30), (METROPOLIS close at +2222.50), (RBLBANK close at +179.05), (PVRINOX close at -1486.60), and (MANAPPURAM close at +177.61) 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.

HINDCOPPER, IGL, ABFRL, SAIL, PNB, and BANDHANBNK stocks has the possibilities of entrants in the ban list.

MANAPPURAM stocks has the possibilities of exit from the ban list.

Daily Pivots

As per the above pivots data, 24300 to 24800 is the Nifty 50 trading range.  

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