Heavyweight Selling Drives Nifty Down to 22,700 in Fourth Consecutive Loss

At the close, the Nifty 50 was at 22,704.70 down by 0.80%

The NSE Nifty 50 commenced Wednesday’s trading session in the red, marking a continuation of its downward trend from the previous sessions. Closing below the crucial 22,750 mark, the Indian benchmark equity indices concluded in deep red territory for the fourth consecutive session. This decline was primarily driven by losses in heavyweight financials and IT stocks.

The persisting uncertainty surrounding domestic election outcomes and the timing of potential US rate cuts added to the market’s pessimism. Additionally, the penultimate day of the monthly F&O expiry for the May series contributed to profit booking in financial shares and heightened nervousness ahead of the Lok Sabha election results.

The Indian equity market witnessed selling pressure across various sectors including Financial Services, oil & gas, IT, realty, and banking. Nifty closed lower by -183.45 points or 0.80% at 22,704.70, falling below the 22,700 mark. Despite a minor mid-session recovery attempt, another round of selling led to a sharp downturn, with bears maintaining control throughout the day.

Weak global cues, especially in anticipation of the release of the US core Personal Consumption Expenditures (PCE) data, prompted investors to take profits. Heightened concerns about global inflation, exemplified by recent trends in Japan and Australia, diminished expectations of a US Fed rate cut in the near term. This sentiment contributed to broad-based weakness across sectors, with financials and IT witnessing notable underperformance.

The Indian equity market’s downturn reflects a confluence of domestic and international factors, with investors closely monitoring developments both at home and abroad. Continued uncertainty and volatility underscore the importance of a cautious and strategic approach in navigating the current market landscape.

Bank Nifty: Down by 1.30%

The Bank Nifty commenced trading on a negative note, opening in the red and experiencing a decline of 1.30% throughout the day. Closing at 48,501.35, the index mirrored the broader market sentiment. Similarly, the BSE Sensex, representing a diverse range of sectors, recorded a decline of 0.89%, closing at a low of 74,502.90.

In the realm of sectors, the pharmaceutical sector has seen significant growth, rising by 0.55%. Leading the charge, Gland Pharma Ltd. posted an impressive gain of 2.50%, while Torrent Pharmaceuticals Ltd. also performed robustly with a 2.15% increase.

Contrastingly, the financial services sector emerged as the top loser, declining by 1.65%. Within this sector, ICICI Prudential Life Insurance Company Ltd. experienced a substantial drop of 4.09%, and HDFC Asset Management Company Ltd. saw a decrease of 2.93%.

Foreign Institutional Investors (FII/FPI) recorded a buy value of Rs. 14,162.04 crore and a sale value of Rs. 20,003.88 crore, resulting in a net value of -Rs. 5,841.84 crore. On the other hand, Domestic Institutional Investors (DII) registered a buy value of Rs. 12,954.15 crore and a sale value of Rs. 7,720.36 crore, leading to a net value of Rs. 5,233.79 crore.

Bank Nifty

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

The gainers included AU Bank with a 1.52% increase, Bandhan Bank with a 0.68% increase, IndusInd Bank with a 0.28% increase, Federal Bank with a 0.09% increase, and Punjab National Bank with a 0.08% increase.

On the other hand, the biggest losers in the sector included ICICI Bank with a 2.04% decline, HDFC Bank with a 1.60% decline, Axis Bank with a 1.56% decline, IDFC First Bank with a 0.90% decline, and State Bank of India with a 0.74% decline. These results suggest that some of the banking stocks performed better for the day.

Rupee Declines Amid Negative Domestic Trends and Rising Crude Prices

The Indian rupee settled 21 paise lower at 83.39 against the US dollar on Wednesday, influenced by a negative trend in domestic equities and elevated crude oil prices. The rupee opened at 83.22 at the interbank foreign exchange market before closing at 83.39, reflecting a drop from its previous close. Dollar demand from importers and oil marketing companies further pressured the rupee.

Despite these pressures, foreign inflows into the bond markets ahead of the inclusion of India’s government bonds in the global bond index provided some support. This development has helped mitigate the rupee’s decline, underscoring the impact of global financial integration on the local currency.

On Tuesday, the rupee had also experienced a decline, settling 5 paise lower at 83.18 against the US dollar. Meanwhile, the dollar index, which measures the strength of the US dollar against a basket of six currencies, was trading at 104.67, slightly up by 0.05%, buoyed by hawkish Fed commentary and strong US economic data. Additionally, Brent crude futures, a global oil benchmark, increased by 0.78% to $84.88 per barrel, adding to the external pressures on the rupee.

The decline of the rupee amid rising crude oil prices and strong dollar demand highlights the challenges faced by importers and underscores the importance of strategic foreign exchange management. For investors, the inflow of foreign capital into bond markets suggests continued confidence in India’s economic prospects, despite short-term currency fluctuations.

Stocks Highlights

Hindalco Industries Ltd. Sees Significant Gains
Hindalco Industries Ltd. experienced a substantial share price increase, climbing 3.52% from its previous close of Rs 681.30 to a last traded price of Rs 705.30. Intraday analysis reveals that in the past 19 years, only 2.51% of trading sessions have seen intraday gains exceeding 5%. Despite a 3.12% decline in sales—the first revenue contraction in three years—the stock is showing bullish signals. A 5-day moving average crossover on May 27, 2024, suggests potential gains, with historical data indicating an average price increase of 3.73% within seven days of this signal over the last five years. Over the past three years, Hindalco has delivered a return of 75.71%, significantly outperforming the Nifty 100’s 52.55% return.

HDFC Life Insurance Company Ltd. Declines Despite Dividend Announcement
HDFC Life Insurance Company Ltd. saw its share price drop by 2.90%, from Rs 578.45 to a last traded price of Rs 561.70. The company recently announced a dividend of Rs 2.0 per share, with a record date of June 21, 2024. Despite this decline, HDFC Life’s annual revenue growth of 42.38% has surpassed its 3-year CAGR of 12.22%. A 20-day moving average crossover suggests a bullish trend, with an average price gain of 2.85% within seven days of this signal over the past five years. However, the stock’s three-year return of -13.53% trails significantly behind the Nifty 100’s 52.55% return, highlighting recent challenges.

Advance Decline Ratio

Today, the advance-decline ratio was 0.72, and the market breadth was negative. The volatility index India Vix decreased by 0.08 percent to settle at 24.18 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 1081
Decliners – 1500
52Wk High – 74
52Wk Low – 40
High Band Hitters – 107
Low Band Hitters – 98
200d SMA – 21021
50d SMA – 22369
20d SMA – 22488

Top Gainers and Losers Stocks

The top gainers were Hindalco (+3.52%), Divi’s Laboratories (+1.72%), Power Grid (+1.29%), Bajaj Auto (+1.03%), and Cipla (+0.95%).

The top losers were HDFC Life (-2.90%), SBI Life (-2.53%), Tech Mahindra (-2.27%), Tata Consumer (-2.17%), and Bajaj Finserv (-2.04%).

Top Gainers and Losers Sectors

The top gainers sector were Pharma (+0.55%), Metal (+0.27%), and Media (+0.18%).

The top losers sector were Financial Services (-1.65%), Oil & Gas (-1.01%), IT (-1.00%), Realty (-0.90%), and FMCG (-0.54%).

SECTORS – NOTABLE ACTION
PHARMA+0.55%
METAL +0.27%
MEDIA +0.18%
FINANCIAL SERVICES -1.65%
OIL & GAS -1.01%
IT -1.00%

Stocks Ban List

(SEBI) F&O ban list (ABFRL open at -278.00 and close at +299.30), (HINDCOPPER open at +372.80 and close at +377.05), (IDEA open at -14.45 and close at +14.80), (BIOCON open at +315.50 and close at +323.60), and (PEL open at -819.00 and close at +830.10) 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.

GMRINFRA, NATIONALUM, SUNTV, SAIL, ZEEL, HAL, BALRAMCHIN, IDFCFIRSTB, INDIACEM, ASHOKLEY, and BSOFT stocks has the possibilities of entrance in the ban list.

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

Daily Pivots

As per the above pivots data, 22600 to 22900 is the Nifty 50 trading range.

Read previous -Daily Insights- here
Third Day of Negative Closes for Equity Indices Due to Volatility
Nifty Surges Past 23,100 in Positive Start, Erases Gains in Last Hour
Nifty Pulls Back from Peak Levels Due to Global Market Weakness

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