Dalal Street Plunges as NDA Falls Short of Exit Poll Expectations

At the close, the Nifty 50 was at 21,884.50 down by 5.93%

On June 4, the NSE Nifty 50 commenced on a downward trajectory, plunging by a staggering 5.93% and closing below the crucial 22000 mark. Dalal Street experienced a tumultuous day as market participants grappled with unexpected election results, with the BJP-led NDA securing a mandate but failing to secure the anticipated stronger majority. This resulted in the largest single-day fall for the Nifty50 index since March 23, 2020, shedding 1379.40 points to settle at 21,884.50.

Volatility soared, evidenced by the India VIX skyrocketing by 50% to surpass 31 intraday, marking the most significant surge in the volatility index in at least nine years. Panic selling dominated the morning session, followed by a brief mid-session recovery that was short-lived as another wave of selling in the final session further dragged down the index.

Sector-wise, profit booking was witnessed across major indices, with PSU Banks and Energy sectors suffering the most significant losses. The unexpected election outcome triggered fear selling, reversing recent market gains. However, expectations of coalition stability under the BJP’s leadership tempered substantial downside risks in the medium term.

Moving forward, markets anticipate a shift in political policy focusing on social economics, likely benefiting the rural economy. However, caution is advised in sectors such as power, capital goods, real estate, and industrials in the near term, despite robust long-term growth prospects. Amidst uncertainties, investors seek policy continuity and economic fundamentals to drive India’s long-term structural growth trajectory.

Bank Nifty: Down by 7.95%

The Bank Nifty and BSE Sensex experienced significant declines, mirroring the turmoil seen in the broader market. The Bank Nifty opened in the red, plummeting by 7.95% throughout the trading session, ultimately closing at 46,928.60. Likewise, the BSE Sensex followed suit, registering a 5.74% decrease, concluding the day at a low of 72,079.05.

In the sectorial front, the Fast-Moving Consumer Goods (FMCG) sector has shown remarkable gains, rising by 0.95%. Leading this surge, Dabur India Ltd. experienced an impressive increase of 6.46%, while Hindustan Unilever Ltd. followed closely with a rise of 5.78%.

Conversely, the Oil & Gas sector faced significant challenges, emerging as the top loser with a steep decline of 11.80%. Within this struggling sector, Adani Total Gas Ltd. suffered a notable loss of 18.53%, and Oil & Natural Gas Corporation Ltd. saw a decrease of 16.23%.

Foreign Institutional Investors/Foreign Portfolio Investors bought stocks worth Rs. 26,776.17 and sold stocks worth Rs. 39,212.39, resulting in a net value of -12,436.22 (Rs. Cr.).

Domestic Institutional Investors bought stocks worth Rs. 25,963.84 and sold stocks worth Rs. 29,282.82, resulting in a net value of -3,318.98 (Rs. Cr.).

Bank Nifty

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

Today, there were no gainers in the Nifty Bank.

On the other hand, the biggest losers in the sector included Bank of Baroda with a 15.74% decline, Punjab National Bank with a 15.15% decline, State Bank of India with a 13.37% decline, Bandhan Bank with a 8.79% decline, and IndusInd Bank with a 7.97% decline. These results suggest that all of the banking stocks not performed better for the day.

Rupee Plunges Amid Election Uncertainty and Market Sell-Off

On election result day, the rupee tumbled by 45 paise to close at 83.59 against the US dollar, reflecting investor anxiety as the ruling BJP faced electoral uncertainty. This depreciation from the previous close of 83.14 on Monday highlights the market’s reaction to the potential lack of a decisive majority in the Lok Sabha elections.

The rupee’s decline was exacerbated by a significant sell-off in domestic equities and a robust US dollar, which gained strength against major global currencies. At the interbank foreign exchange market, the rupee opened at 83.25, fluctuating between a high of 83.23 and a low of 83.59 during the trading session.

Foreign investors appeared cautious amid the political uncertainty, contributing to the currency’s fall. The dollar index, which measures the greenback’s performance against a basket of six major currencies, rose by 0.17% to 104.25, further pressuring the rupee. Additionally, Brent crude futures, the global oil benchmark, saw a decline of 1.88% to $76.89 per barrel, indicating broader market volatility.

The rupee’s performance underscores the sensitivity of currency markets to political developments and investor sentiment, particularly in emerging markets like India. As election results continue to unfold, the financial landscape remains vigilant, closely monitoring potential shifts in economic policy and investor confidence.

Stocks Highlights

Hindustan Unilever Ltd. Stock Performance and Insights

Hindustan Unilever Ltd. (HUL) shares experienced a significant rise, moving up by 5.78% from its previous close of Rs 2,355.90, with the last traded price at Rs 2,492.15. Notably, intraday gains higher than 5% have only occurred in 0.99% of trading sessions over the past 19 years. A bullish signal was observed with a 20-day moving average crossover, historically resulting in an average price gain of 2.32% within seven days over the last five years.

Comparing stock returns, HUL provided a modest 3-year return of 0.59%, significantly trailing behind the Nifty 100’s return of 52.67%. Financially, the company has managed its expenses efficiently, allocating less than 1% of its operating revenues to interest expenses and 4.86% to employee costs for the year ending March 31, 2024.

Adani Ports & Special Economic Zone Ltd. Decline and Financials

Adani Ports & Special Economic Zone Ltd. witnessed a sharp decline, with its share price dropping by 21.40% from the previous close of Rs 1,583.95 to Rs 1,245.00. Despite this downturn, the company announced a dividend of Rs 6.0 per share, with a record date set for June 14, 2024.

Over the past three years, Adani Ports delivered an impressive return of 89.96%, outpacing the Nifty 100’s 52.67% return. The company’s financial expenditures included 10.65% of operating revenues towards interest expenses and 7.1% towards employee costs for the year ending March 31, 2024. These figures reflect Adani Ports’ strategic financial management amidst market volatility.

Advance Decline Ratio

Today, the advance-decline ratio was 0.07, and the market breadth was negative. The volatility index India Vix increased by 23.65 to settle at 25.89 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 179
Decliners – 2448
52Wk High – 83
52Wk Low – 271
High Band Hitters – 24
Low Band Hitters – 609
200d SMA – 21080
50d SMA – 22408
20d SMA – 22488

Top Gainers and Losers Stocks

The top gainers were Hindustan Unilever (+5.78%), Britannia (+3.33%), Nestle India (+3.27%), Hero MotoCorp (+3.16%), and Tata Consumer (+1.68%).

The top losers were Adani Ports (-21.40%), Adani Enterprises (-19.07%), ONGC (-16.23%), NTPC (-14.52%), and Coal India (-13.54%).

Top Gainers and Losers Sectors

The top gainers sector were FMCG (+0.95%).

The top losers sector were Oil & Gas (-11.80%), Metal (-10.63%), Realty (-9.62%), Financial Services (-7.86%), and Media (-6.59%).

SECTORS – NOTABLE ACTION
FMCG +0.95%
OIL & GAS -11.80%
METAL -10.63%
REALTY -9.62%

Stocks Ban List

(SEBI) F&O ban list (ZEEL open at -158.20 and close at -138.85) 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.

SAIL stock has the possibilities of entrance in the ban list.

Daily Pivots

As per the above pivots data, 21000 to 23100 is the Nifty 50 trading range.

Read previous -Daily Insights- here
Nifty Skyrockets to All-Time Highs After Market Celebrates ‘Exit Poll’ Results
IPO Financing Strategies: Structuring the Deal
Bulls Regain Momentum Ahead of ‘Exit Poll’, Nifty Ends on Positive Note

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