Indian Equity Markets 2nd Red Session Due to Banking & IT Losses

At the close, the Nifty 50 was at 21,665.80 down by 0.35%

The NSE Nifty 50 commenced the trading day on a low note, witnessing a dip of 0.35 percent before concluding in the red zone. This slump led to Nifty settling at approximately 21,650, influenced by widespread selling across various sectors. Despite an initial negative trajectory, a surge in buying activity at lower levels managed to mitigate some of the losses incurred throughout the day.

Indian equity markets persisted in a downward trend for the second consecutive session, primarily affected by the decline in banking and IT stocks. This decline mirrors the prevailing negative sentiments observed in Asian markets.

A noteworthy aspect impacting market dynamics is the declining dollar and US bond yields. This global context favors equities, anticipating substantial Foreign Institutional Investor (FII) inflows in 2024. Such inflows possess the potential to elevate high-quality large-cap stocks, notably within sectors like banking, which currently exhibit fair valuations.

However, recent market movements have been influenced by external factors. Weak Chinese manufacturing data and escalating tensions in the Crimson Ocean have stirred concerns about disrupting global trade and crude supplies. These developments, combined with an approaching results season, have led investors to adopt a profit-booking strategy, contributing to the market’s downward trajectory.

Amidst this scenario, auto stocks experienced a decline attributed to lower-than-expected volume figures. Conversely, pharma stocks emerged as standouts, buoyed by a resurgence in the US economy.

Bank Nifty: Down by 0.98%

The Bank Nifty commenced its trading session on a downward trajectory, marking a 0.98% decrease, culminating at 47,761.65 and persisting in the red zone throughout the trading day. Similarly, the BSE Sensex commenced lower, with a 0.53% dip, closing at 71,892.48, echoing the Bank Nifty’s downtrend.

In sectoral movements, the Pharmaceutical industry showcased a remarkable upsurge, experiencing a substantial 2.46% increase. Lupin Ltd. led this sector with an impressive gain of 6.49%, while GlaxoSmithKline Pharmaceuticals Ltd. also displayed a commendable 5.04% uptick.

On the contrary, the Automotive sector encountered challenges, facing a 1.37% decline. Eicher Motors Ltd. saw a significant setback, registering a notable loss of -3.57%, while Ashok Leyland Ltd. also experienced a downturn, marking a -2.88% decrease in valuation.

Foreign Institutional Investors (FIIs/FPIs) maintained a positive investment stance, recording a buy value of Rs. 10,200.31 crore against a sale value of Rs. 8,598.15 crore. This resulted in a net buying activity of Rs. 1,602.16 crore in the market.

Conversely, Domestic Institutional Investors (DIIs) adopted a different approach, showcasing a buy value of Rs. 8,695.68 crore but with a higher sale value of Rs. 10,654.72 crore. Consequently, DIIs reflected a net selling position of -Rs. 1,959.04 crore, presenting a contrasting stance to FIIs in the market.

Bank Nifty

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

The Bank Nifty isn’t showing any gains today. On the other hand, the biggest losers in the sector included AU Bank with a 2.89% decline, Federal Bank with a 2.84% decline, Kotak Bank with a 2.32% decline, IDFC First Bank with a 2.05% decline, and IndusInd Bank with a 1.74% decline. These results suggest that banking stocks not performed better for the day.

Rupee Depreciation Against US Dollar Amidst Market Volatility

The Indian rupee faced a depreciation of 11 paise, reaching 83.32 (pro) against the US dollar on Tuesday, influenced by subdued movements in the local stock market and heightened demand for the dollar from importers. This decline follows a similar trend observed on Monday, where the rupee weakened by 5 paise to settle at 83.21 against the US dollar during the first trading session of 2024.

Various factors contributed to this depreciation, including fund outflows and increased demand for the dollar from importers, collectively impacting investor sentiments negatively. Weakness in domestic markets coupled with a stronger US dollar, driven by geopolitical tensions in the Red Sea and ongoing conflicts in the Middle East, further exacerbated the rupee’s devaluation by 0.14%.

The dollar index, a measure of the dollar’s performance against a basket of six major currencies, demonstrated a 0.11% increase, reaching 101.44 on Tuesday. Concurrently, Brent crude futures, the global oil benchmark, surged by 2.13% to $78.68 per barrel. The spike in crude oil prices added pressure to the rupee’s value, contributing to its depreciation against the US dollar.

The interbank foreign exchange market witnessed the rupee opening at 83.28 and settling at 83.32 against the dollar, underscoring the currency’s vulnerability amidst global market fluctuations and geopolitical tensions. Investors remain watchful of these developments as they navigate the currency market in light of these volatilities.

Stocks Highlights

Divi’s Laboratories Ltd. witnessed a positive surge, with its share price escalating by 3.09% to Rs 4,037.00 from the previous close of Rs 3,915.90. Notably, only 1.98% of trading sessions in the last 19 years exhibited intraday gains higher than 5%. Despite a 10.6% decline in sales, marked as the company’s first revenue contraction in three years, a bullish signal emerged with a weekly stochastic crossover ending on Dec 29, 2023. Historically, this signal heralds an average price gain of 5.84% within seven weeks.

Moreover, the company’s financial allocation toward interest expenses remained below 1% of operating revenues and stood at 12.55% for employee costs in the fiscal year ending on March 31, 2023.

Conversely, Eicher Motors Ltd. observed a -3.57% downturn, with its share price dropping to Rs 3,894.00 from the previous close of Rs 4,038.35. In only 2.37% of trading sessions over the last 19 years, intraday declines surpassed 5%. Despite showcasing impressive annual revenue growth of 40.03%, surpassing its three-year CAGR of 15.58%, the recent emergence of a 14-day moving crossover signals a bearish trend. Historically, this signal precedes an average price decline of -2.59% within seven days.

Advance Decline Ratio

Today, the advance-decline ratio was 0.89, and the market breadth was negative. The volatility index India Vix decreased by 0.68 percent to settle at 14.58 and the FIIs were net buyers today.

DAILY MARKET ACTION
Advancers – 1170
Decliners – 1322
52Wk High –  210
52Wk Low – 8
High Band Hitters – 142
Low Band Hitters – 34
200d SMA – 19183
50d SMA – 20250
20d SMA – 21289

Top Gainers and Losers Stocks

The top gainers were Divi’s Laboratories (+3.09%), Adani Ports (+2.97%), Sun Pharmaceutical (+2.77%), Coal India (+2.61%), and Cipla (+2.55%).

The top losers were Eicher Motors (-3.57%), M&M (-2.48%), UltraTech Cement (-2.47%), Larsen & Toubro (-2.40%), and Kotak Bank (-2.32%).

Top Gainers and Losers Sector

The top gainers sector were Pharma (+2.46%), Oil & Gas (+0.66%), Media (+0.49%), and Metal (+0.30%).

The top losers sector were Auto (-1.37%), IT (-1.16%), Realty (-1.04%), Financial Services (-0.52%), and FMCG (-0.14%).

SECTORS – NOTABLE ACTION
PHARMA +2.46%
OIL & GAS +0.66%
MEDIA +0.49%
AUTO -1.37%
IT -1.16%
REALTY -1.04%

Stocks Ban List

(SEBI) F&O ban list (BALRAMCHIN open at +413.90 and close at -405.10), and (HINDCOPPER open at -273.00 and close at -269.70) 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.

DELTACORP, SAIL, INDUSTOWER, IEX, ZEEL, CHAMBLFERT, PEL, and BHEL stocks has the possibilities of entrance in the ban list.

Daily Pivots

As per the above pivots data, 21500 to 21800 is the Nifty 50 trading range.

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