Global Market Weakness Drags Down Domestic Stock Market for Third Consecutive Day

At the close, the Nifty 50 was at 19,542.65 down by 0.42%

Ongoing Weakness in Indian Stock Market On October 20th, the Indian stock market faced its third consecutive day of decline, with benchmark indices reflecting the impact of global market trends. The NSE Nifty 50 started lower and ended with a 0.42% decrease, falling below the 19,550 mark. This decline was largely attributed to the rising US bond yields, prompting capital outflows from emerging markets like India. The persistence of the US 10-year yield around 5% continues to pose a significant challenge to equity markets worldwide.

Geopolitical Uncertainty and Monetary Tightening Concerns The market has been unsettled by uncertainties arising from tensions in West Asia and the US Federal Reserve’s Chairman advocating sustained monetary tightening. These geopolitical and monetary factors have added a layer of volatility to the market, increasing concerns among investors.

Impact on Domestic Economy and Businesses Elevated oil prices and surging US bond yields not only influence market sentiment but also have repercussions on the domestic monetary environment and the operational performance of companies. Businesses are grappling with these external pressures.

Blue-Chip Companies and Market Consolidation Furthermore, the varying performance of blue-chip companies, often influenced by sluggish global and domestic demand, is guiding the market toward a consolidation phase in the near future. In these turbulent times, investors and market participants are strongly advised to exercise caution and closely monitor both global and domestic developments.

Bank Nifty: Down by 0.07%

Continuing the recent trend, both the Bank Nifty and the BSE Sensex experienced minor setbacks in the stock market. The Bank Nifty commenced the day in negative territory and concluded with a slight 0.07% decline, closing at 43,723.05. Similarly, the BSE Sensex saw a modest dip of 0.35%, ending the trading session at 65,397.62.

In today’s sectorial landscape, there were no sectors that recorded gains. The most substantial losses were observed in the Consumer Durables sector, which registered a decline of 1.65%. Notably, two prominent companies within this sector, Havells India Ltd. and Crompton Greaves Consumer Electricals Ltd., faced notable setbacks. Havells India Ltd. experienced a significant decline of -5.16%, while Crompton Greaves Consumer Electricals Ltd. witnessed a dip in its share price by -3.17%.

Foreign Institutional Investors (FII/FPI) remained active participants in the Indian market, with purchases of stocks totaling Rs. 13,645.57 crore and sales amounting to Rs. 13,189.36 crore. This resulted in a net investment value of Rs. 456.21 crore.

Domestic Institutional Investors (DII) also remained engaged in the market, acquiring stocks valued at Rs. 6,870.72 crore and selling stocks worth Rs. 6,862.19 crore. Their net investment value stands at Rs. 8.53 crore.

Bank Nifty

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

The gainers included Kotak Bank with a 1.81% increase, IndusInd Bank with a 1.29% increase, HDFC Bank with a 0.56% increase. On the other hand, the biggest losers in the sector included IDFC First Bank with a 2.26% decline, Punjab National Bank with a 2.09% decline, Bandhan Bank with a 1.59% decline, State Bank of India with a 1.47% decline, and Axis Bank with a 1.21% decline. These results suggest that some banking stocks not performed better for the day.

Buzz

The Indian rupee faced a minor depreciation of 5 paise against the US dollar, reaching a rate of 83.18 in early trade on Friday. Several factors have contributed to this decline, with foreign fund outflows and the escalating crude oil prices taking center stage.

Foreign Fund Outflows Impact: Unabated foreign fund outflows have exerted significant pressure on the rupee’s exchange rate. Investors and market participants have been closely monitoring these capital outflows, which have adversely affected the rupee’s value.

Market Sentiment and Dollar Strength: The prevailing negative sentiment in the equity markets and the robust performance of the US dollar have further compounded the challenges faced by the Indian currency. The global strength of the US dollar continues to have a substantial impact on exchange rates worldwide.

Intraday Fluctuations: The intraday trading pattern reveals that the rupee opened weak at 83.17 against the dollar, subsequently touching its lowest point at 83.20 before settling at 83.18. This 5-paise loss highlights the currency’s sensitivity to international market dynamics.

Crude Oil Prices and Global Impact: Crude oil prices, specifically Brent crude futures, have risen by 0.94% to $93.25 per barrel. These increases in oil prices often have a cascading effect on emerging market currencies, including the Indian rupee.

Buzzing

Kotak Mahindra Bank Ltd. exhibited a promising performance in the stock market with a 1.81% increase, reaching a closing price of Rs 1,770.00. However, recent signals suggest a possible downturn, as a 20-day moving average crossover appeared on October 18, 2023. Historical data reveals an average price decline of -2.13% within 7 days of such signals over the past 5 years. On a brighter note, the bank has demonstrated remarkable growth in net profit per branch, with a significant 21.87% increase last year. Furthermore, the bank’s loan book growth outpaces its 5-year compound annual growth rate (CAGR) with a YoY increase of 17.94%, compared to the 5-year CAGR of 8.08%, indicating a strong performance in its lending activities.

Conversely, ITC Ltd. experienced a -2.75% decrease, closing at Rs 438.00. Although the company has shown robust annual revenue growth of 16.66%, surpassing its 3-year CAGR of 11.8%, it faces challenges. ITC Ltd. needs to address its interest expenses, which account for less than 1% of operating revenues, and its relatively high employee cost, standing at 8.09% of total expenses in the year ending on March 31, 2023. Investors and analysts must carefully monitor ITC Ltd.’s financial health and cost management in the coming quarters to assess its resilience in the market.

Advance Decline Ratio

Today, the advance-decline ratio was 0.46, and the market breadth was negative. The volatility index India Vix decreased by 0.55 percent to settle at 10.84 and the FIIs were net buyers today.

DAILY MARKET ACTION
Advancers – 751
Decliners – 1647
52Wk High –  117
52Wk Low – 15
High Band Hitters – 85
Low Band Hitters – 58
200d SMA – 18594
50d SMA – 19623
20d SMA – 19650

Top Gainers and Losers Stocks

The top gainers were Kotak Bank (+1.81%), IndusInd Bank (+1.29%), SBI Life (+1.18%), TCS (+1.05%), and NTPC  (+0.63%).

The top losers were ITC (-2.75%), Tata Steel (-2.30%), BPCL (-2.06%), Divi’s Laboratories (-1.95%), and Cipla (-1.87%).

Top Gainers and Losers Sector

The top losers sector were Consumer Durables (+1.65%), Oil & Gas (+1.44%), Metal (+1.33%), FMCG (+1.32%), and Pharma (-1.09%).

SECTORS – NOTABLE ACTION
CONSUMER DURABLES -1.65%
OIL & GAS -1.44%
METAL -1.33%

Stocks Ban List

(SEBI) F&O ban list (BALRAMCHIN open at -421.45 and close at +422.75), (IBULHSGFIN open at +173.90 and close at -173.35), (INDIACEM open at +225.50 and close at -225.60), (DELTACORP open at -127.00 and close at +129.80), (MANAPPURAM open at +141.80 and close at -141.45), (MCX open at -2182.15 and close at +2320.00), and (GNFC open at -663.80 and close at -657.10) 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.

PNB, NMDC, BIOCON, METROPOLIS, L&TFH, CHAMBLFERT, PVRINOX, RBLBANK, SUNTV, BHEL and ESCORTS stock has the possibilities of enterance in the ban list.

IBULHSGFIN, INDIACEM, DELTACORP, MANAPPURAM, MCX, and GNFC stocks has the possiblities of exit from ban list.

Daily Pivots

As per the above pivots data, 19500 to 19600 is the Nifty 50 trading range.

Read previous -Daily Insights- here
Global Equities Decline Amid Middle East Conflict Concerns
Market Recovery Short-Lived Sectors Face Selling Pressure
Market Soars on Positive Global Cues and Sector-Wide Buying

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