Dark Clouds Over Nifty: Will It Hold Steady or Face a Crash? Why Nifty May Be on the Brink of a Downturn.

NiftyTrader • October 15, 2024

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Index	Price	Change	% Chg
Nifty 50	25,057.35	–70.60	–0.28%
Nifty MidCap 50	16,658.95	+41.50	+0.25%
Nifty SmallCap 50	9,312.35	+88.00	+0.95%
Nifty Bank	51,906.00	+89.10	+0.17%
Nifty Financial	23,863.45	+5.90	+0.02%
BSE SENSEX	81,820.12	-152.93	–0.19%

October 15,2024

At the close, the Nifty 50 was at 25,057.35 down by 0.28%

On Tuesday, October 15, 2024, the NSE Nifty 50 started off with promise, only to surrender those gains and close in the red, down by 0.28% at 25,057.35. This downward slide, which saw the index slip below 25,100, was fueled by rising apprehension about global economic instability and the persistent conflict in West Asia, casting a shadow over investor sentiment.

As the day progressed, it became clear that the early optimism was fleeting. A reasonable negative candle formed on the daily chart, complete with minor upper and lower shadows, signaling crucial resistance around the 25,200 mark. This technical setup hints at further range-bound movement in the short term, leaving traders anxiously watching for breaks in this pattern.

Despite a positive start, the market was unable to maintain momentum, with the Nifty slipping toward the 25,000 level. The 25,200 level proved to be a formidable barrier, triggering a sharp reversal that dominated the day’s trading. Ultimately, the index closed with a loss of 70.60 points, reflecting a market still grappling with volatility.

In contrast to the frontline index, broader markets showed resilience, with midcaps rising by 0.21% and smallcaps advancing by 1.11%, defying the downward trend of major indices. However, the day was marked by dark cloud cover candlestick patterns on the daily chart, suggesting that consolidation between 25,000 and 25,200 is essential for a clearer market outlook.

What Lies Ahead?

Traders and analysts are eyeing the critical support level of 24,900. Should the Nifty dip below this threshold, it could spark a correction towards 24,700. While the Nifty demonstrated volatility throughout the day, it managed to stay above the 21 EMA on the daily chart. A breach of this level could lead to increased weakness and further declines.

The trading session’s turbulence was largely driven by mixed global trends and partial profit-booking, following the prior day’s upsurge. While declining crude oil prices might benefit the domestic economy, they also indicate a weakening global demand, contributing to the market’s cautious stance.

Market Regulation Updates

In regulatory news, the Securities and Exchange Board of India (Sebi) announced an increase in index futures and options trading limits for members by 15 times to Rs 7,500 crore, reflecting a significant adjustment in the market landscape. This decision aligns with existing practices in the currency derivatives segment, as positions in equity derivatives will now be monitored based on the previous day’s total open interest.

Gold Prices Soar

Amidst this backdrop of uncertainty, gold prices soared to new heights, reaching over Rs. 78,000 per 10 grams in the domestic market. This bullish trend is largely attributed to robust festive demand as the country prepares for Dhanteras and Diwali. With India being the second largest consumer of gold after China, expectations for a 10-15% year-on-year rise in demand are high this festive season. Yet, the international market tells a different story, as Comex gold traded over $2,660, reflecting a stronger USD.

The Big Question

As the markets continue to navigate through choppy waters, one pressing question looms large: Will the Nifty find its footing, or are we on the brink of a deeper correction? The coming days will be critical in determining the path ahead for investors.

Bank Nifty: Up by 0.17%

The Bank Nifty managed to stay afloat, opening in the green and gaining 0.17% to close at 51,906.00. This resilience stands in stark contrast to the BSE Sensex, which faced headwinds, slipping 0.19% to finish in the red at 81,820.12.

In the sectorial front, the Realty sector has emerged as a beacon of hope, gaining an impressive 2.05% overall. Among the standout performers, Raymond Ltd. led the charge with a remarkable 5.71% increase, showcasing its resilience and potential for growth. Sobha Ltd. followed closely behind, notching up a 5.14% gain.

On the flip side, the Metal sector is facing a harsh reality, suffering as the top loser with a decline of 1.44%. The pain is palpable for National Aluminium Company Ltd., which saw a 3.67% drop, and Steel Authority of India Ltd., down 2.63%.

Foreign Institutional Investors (FIIs) reported a buy value of Rs. 16,097.89 crore while their sale value soared to Rs. 17,846.60 crore, resulting in a net outflow of Rs. 1,748.71 crore.

Domestic Institutional Investors (DIIs) demonstrated a different approach. With a buy value of Rs. 13,229.43 crore and a sale value of Rs. 11,574.47 crore, they managed a net inflow of Rs. 1,654.96 crore.

Bank Nifty

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

The gainers included ICICI Bank with a 1.97% increase, and Federal Bank with a 0.89% increase.

On the other hand, the biggest losers in the sector included Kotak Bank with a 0.81% decline, IndusInd Bank with a 0.69% decline, AU Bank with a 0.68% decline, Axis Bank with a 0.57% decline, and IDFC First Bank with a 0.44% decline. These results suggest that most of the banking stocks not performed better for the day.

Gold and Silver Rate (INR) 15th October, 2024

22 K Gold / g	₹ 7,095	-20
24 K Gold / g	₹ 7,740	-22
18 K Gold / g	₹ 5,805	-17

Silver / g	₹ 96.90	-0.10
Silver / kg	₹ 96,900	-100

Is the Rupee Stabilizing or Just Catching Its Breath?

In a modest but notable turn of events, the Indian rupee closed slightly higher, gaining 1 paisa to settle at 84.04 against the US dollar. This slight appreciation comes amid a backdrop of range-bound trading, where the local currency found support from lower crude oil prices and what seems to be a subtle intervention by the Reserve Bank of India.

However, the rupee’s rise was not without its challenges. Significant foreign fund outflows, a bearish trend in domestic equities, and the overall strength of the dollar cast shadows on the rupee’s performance.

At the interbank foreign exchange market, the rupee opened at 84.06 against the greenback, oscillating within a tight band of 84.03 to 84.07 throughout the day. It finally settled at 84.04, reflecting a modest increase of just 1 paisa from its previous close.

Bearish Sentiment

On Monday, the rupee had managed to recover slightly from its record lows, appreciating 5 paisa to close at 84.05 against the dollar. Yet, analysts warn that the Indian rupee remains perilously close to its all-time lows due to the strong dollar and weakening currencies across Asia. The bearish sentiment in domestic equities and surging inflation are further pressures that could drag the rupee down.

On the macroeconomic front, surging vegetable prices pushed India’s retail inflation rate to a staggering nine-month high of 5.49% in September, according to government data released Monday. This inflationary pressure adds another layer of complexity to the rupee’s outlook.

Meanwhile, the dollar index, which measures the greenback’s strength against a basket of six currencies, was trading **0.18% lower at 103.11, providing a sliver of respite for other currencies, including the rupee.

Adding to this intricate puzzle, Brent crude, the global oil benchmark, fell sharply by 5.10% to $73.51 per barrel, which often plays a crucial role in shaping the rupee’s trajectory.

In a world of financial turmoil, the question lingers: Is the rupee merely stabilizing or is it gearing up for its next move? Only time will unveil the true story.

Stocks Highlights

Bharat Petroleum Corporation Ltd. is making waves in the market, with its share price surging by 2.52% to settle at Rs 349.35 from the previous close of Rs 340.75. But don’t be fooled by this upward tick just yet. Intraday insights reveal a stark truth: in the past 19 years, only 1.79% of trading sessions experienced intraday gains exceeding 5%.

Yet, there’s a glimmer of hope. The company has delivered a remarkable ROE of 35.51% for the year ending March 31, 2024, significantly outpacing its five-year average of 21.77%. This is a bold signal of strength. However, the latest reports bring concerning news—sales have contracted by 5.13%, marking the first revenue decline in three years.

But could this be a buying opportunity? A bullish signal emerged yesterday with a 50-day moving average crossover. Historically, this indicator has led to an average price gain of 4.78% within 30 days, suggesting that bulls are firmly in the driver’s seat.

HDFC Life Insurance Company Ltd. is on the defensive, with its share price tumbling by 3.58% to Rs 714.05, down from Rs 740.60. However, don’t count this giant out just yet. The company’s annual revenue growth of 42.38% has outperformed its three-year CAGR of 12.22%—a clear testament to its resilience in a challenging market.

Adding to the intrigue, a green flag for bulls has been raised with a weekly stochastic crossover appearing at the end of the week on October 11, 2024. The last decade shows an average price gain of 6.31% within seven weeks following this signal, hinting at a potential rebound.

Interestingly, the company’s operational efficiency shines as it has spent less than 1% of its operating revenues on interest expenses, and only 3.22% on employee costs in the fiscal year ending March 31, 2024.

Advance Decline Ratio

Today, the advance-decline ratio was 0.92, and the market breadth was negative. The volatility index India Vix increased by 0.05 to settle at 13.00 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 1322
Decliners – 1438
52Wk High – 106
52Wk Low – 25
High Band Hitters – 114
Low Band Hitters – 63
200d SMA – 23258
50d SMA – 25060
20d SMA – 25455

Top Gainers and Losers Stocks

The top gainers were BPCL (+2.52%), ICICI Bank (+1.97%), Bharti Airtel (+1.32%), Britannia (+1.22%), and Asian Paint (+1.18%).

The top losers were HDFC Life (-3.58%), Wipro (-3.07%), Bajaj Auto (-3.04%), Bajaj Finance (-2.48%), and Hindalco (-2.19%).

Top Gainers and Losers Sectors

The top gainers sector were Realty (+2.05%), Media (+0.62%), Consumer Durables (+0.43%), FMCG (+0.38%), and Financial Services (+0.02%).

The top losers sector were Metal (-1.44%), Auto (-0.83%), Pharma (-0.52%), IT (-0.33%), and Oil & Gas (-0.27%), .

SECTORS – NOTABLE ACTION
REALTY +2.05%
MEDIA +0.62%
CONSUMER DURABLES +0.43%
METAL -1.44%
AUTO -0.83%
PHARMA -0.52%

Stocks Ban List

(SEBI) F&O ban list (IEX close at -191.60), (TATACHEM close at -1099.00), (NATIONALUM close at -219.02), (CHAMBLFERT close at +504.10), (GNFC close at -645.65), (PNB close at -104.98), (MANAPPURAM close at -183.20), (HINDCOPPER close at -320.90), (SAIL close at -130.94), (GRANULES close at -599.65), (RBLBANK close at +208.72), and (IDFCFIRSTB close at -72.74) 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.

AARTIIND, LTF, EXIDEIND, BANDHANBNK, BSOFT, CANBK, GMRINFRA, ABFRL, NMDC, LICHSGFIN, PEL, BALRAMCHIN, and ADANIENT stocks has the possibilities of entrance in the ban list.

IDFCFIRSTB stock has the possibilities of exit from the ban list.