Indices Decline 3rd Day as Fed Hints at Prolonged Higher Rates

At the close, the Nifty 50 was at 19,742.35 down by 0.80%

In a day marked by volatility, the NSE Nifty 50 index encountered a tough opening, commencing with a lower trajectory and ultimately concluding with a 0.80 percent decline. This descending trend pushed the index below the critical 19,750 threshold, causing apprehension among investors and market observers.

Global Influence on Domestic Indices The persistent downtrend in domestic benchmark indices can be linked to the successive losses sustained over the past three days. The decision of the US Federal Reserve to uphold its current policy stance while indicating an extended period of elevated interest rates had a ripple effect on global equities. This worldwide bearish sentiment spilled over into the domestic market, eliciting a nervous response from investors.

Fed’s Hawkish Position and its Consequences The primary catalyst behind this market upheaval is the hawkish stance adopted by the Fed chair. The prospect of prolonged periods of high-interest rates casts a veil of uncertainty over the already decelerating global economy.

Implications for Specific Sectors within the domestic market, the impact of this downturn was most acutely experienced by PSU banks and mid & small-cap stocks. These sectors bore the brunt due to stretched valuations and concerns about yield moderation. Furthermore, the surge in oil prices and erratic rainfall patterns added to investor caution, exacerbating the challenges faced by the market.

Bank Nifty: Down by 1.68%

During today’s trading session, both the Bank Nifty and the BSE Sensex faced notable setbacks. The Bank Nifty opened on a negative note, enduring a substantial 1.68 percent decline, ultimately closing at 44,623.85. Similarly, the BSE Sensex had a challenging day, experiencing a 0.85 percent drop and concluding at 66,230.24.

Taking a closer look at the Bank Nifty, an alarming development emerges as it slipped below both the 20-day and 40-day moving averages. This breach is often interpreted as a signal of inherent weakness in the index. Additionally, the daily momentum indicator displayed a negative crossover, a signal that technical analysts commonly interpret as a sell sign.

Distinct Sectoral Trends In the media sector, we observed a noteworthy positive performance, with an overall gain of 0.03%. Two standout contributors to this gain were Hathway Cable & Datacom Ltd., surging by an impressive 8.65%, and Network18 Media & Investments Ltd., posting a respectable gain of 1.28%.

On the contrary, the auto sector encountered challenges, emerging as the top loser with a decline of 1.69%. This decline is exemplified by Mahindra & Mahindra Ltd., experiencing a significant loss of -2.88%, and Bharat Forge Ltd., with a notable decline of -2.37%.

Bank Nifty

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

The banking sector experienced a lack of gainers today. Conversely, the sector’s most significant losers included Bank of Baroda, which recorded a 3.16% decline, ICICI Bank with a 2.81% dip, State Bank of India with a 2.20% decrease, IndusInd Bank with a 2.04% drop, and Punjab National Bank with a 1.96% reduction. These outcomes indicate that several banking stocks did not perform well during the day.

Buzz

Rupee Gains Ground Amidst Volatility in Global Markets

In a day marked by cautious trading, the Indian rupee managed to consolidate within a narrow range and closed 5 paise higher at 83.06 (pro) against the US dollar. This modest uptick can be attributed to a slight retreat in crude oil prices from their recent highs.

Challenges in Currency Markets However, the rupee faced headwinds due to the strengthening US dollar index, driven by hawkish remarks from officials at the US Federal Reserve. The central bank’s stance on interest rates has a significant impact on global currency markets, and investors closely monitored these comments.

Global Policy Decisions Add to Uncertainty Adding to the cautious sentiment were upcoming policy decisions by the Bank of England and the Bank of Japan. Such central bank decisions often result in market volatility, prompting investors to exercise prudence in their currency trading.

Intraday Fluctuations Throughout the trading session, the rupee displayed some intraday fluctuations, reaching a high of 83.02 and a low of 83.17. This underlines the importance of monitoring market dynamics closely, especially in times of global economic uncertainty.

Buzzing

Adani Ports & Special Economic Zone Ltd. has shown promise in recent trading sessions, with its share price surging by 1.74% from the previous close of Rs 818.05, reaching a last traded price of Rs 832.30. Notably, a 20-day moving crossover occurred recently, indicating a potentially bullish trend. However, it’s important to note that historically, after such crossovers, the stock has experienced an average decline of -3.7% within 7 days over the past 5 years.

Additionally, Adani Ports & Special Economic Zone Ltd. has displayed robust annual revenue growth, outperforming its 3-year CAGR. Furthermore, in the last 15 years, only a mere 2.89% of trading sessions witnessed intraday declines exceeding 5%, suggesting relative stability.

In contrast, Mahindra & Mahindra Ltd. faced a setback, with its share price dropping by -2.88% from its previous close of Rs 1,634.00 to a last traded price of Rs 1,586.90. However, the company has showcased impressive annual revenue growth, surpassing its 3-year CAGR. Furthermore, the company’s return on equity (ROE) for the year ending March 31, 2023, stood at a commendable 18.24%, outperforming its 5-year average of 10.72%. Historically, only 1.15% of trading sessions in the last 18 years witnessed intraday declines exceeding 5%.

Advance Decline Ratio

During today’s trading session, the advance-decline ratio stood at 0.39, indicating a negative market breadth. Additionally, the India Vix, a measure of market volatility, decreased by 2.78 percent, settling at 10.82. Furthermore, Foreign Institutional Investors (FIIs) were net sellers in the market today.

DAILY MARKET ACTION
Advancers – 662
Decliners – 1702
52Wk High –  58
52Wk Low – 12
High Band Hitters – 59
Low Band Hitters – 33
200d SMA – 18467
50d SMA – 19621
20d SMA – 19687

Top Gainers and Losers Stocks

The leading performers among today’s stocks were Adani Ports, registering a gain of +1.74%, Tech Mahindra with a rise of +1.43%, Dr. Reddy posting an increase of +1.10%, Asian Paint gaining +1.05%, and Bharti Airtel advancing by +1.02%.

Conversely, the day’s underperformers included M&M, witnessing a significant decline of -2.88%, ICICI Bank with a loss of -2.81%, Cipla experiencing a decrease of -2.47%, SBIN with a decline of -2.20%, and IndusInd Bank showing a downturn of -2.04%.

Top Gainers and Losers Sector

The sector that witnessed the most significant gains today was Media, showing an overall increase of +0.03%.

Conversely, the top-performing sectors were Auto, declining by -1.69%, Financial Services with a -1.44% drop, Realty experiencing a -1.21% decrease, Pharma showing a -0.99% dip, and Metal with a -0.55% reduction.

The Nifty Midcap 50 recorded a decline of 0.80 percent, while the Nifty Small Cap 50 saw a more substantial decrease of 1.38 percent throughout the day.

The closing values for the indices were as follows: The Nifty Midcap 50 index concluded at 11,502.50, and the Nifty Small Cap 50 index closed at 5,728.75.

SECTORS – NOTABLE ACTION
MEDIA +0.03%
AUTO-1.69%
FINANCIAL SERVICES -1.44%
REALTY -1.21%

Stocks Ban List

(SEBI) F&O ban list  (HINDCOPPER open at +158.70 and close at -154.25), (BALRAMCHIN open at +440.15 and close at -420.30), (DELTACORP open at -176.75 and close at -175.45), (PNB open at -76.85 and close at -75.00), (IBULHSGFIN open at -198.00 and close at -189.15), (BHEL open at -123.00 and close at +124.25), (CHAMBLFERT open at +283.25 and close at -279.65), (ZEEL open at -264.00 and close at +267.25), and (MANAPPURAM open at -139.65 and close at -137.50) 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.

INDUSTOWER, CANBK, NMDC, SAIL, RBLBANK, NATIONALUM, INDIACEM, GNFC, GRANULES, IRCTC, PEL, PVRINOX, BSOFT, L&TFH, and PFC stocks has the possibilities of enterance in the ban list.

CHAMBLFERT, ZEEL, and MANAPPURAM stocks has the possibilities of exit from ban list.

Daily Pivots

As per the above pivots data, 19670 to 19840 is the Nifty 50 trading range.

Read previous -Daily Insights- here
Day of Losses and Selling Pressure Market Plunges
Market Reacts to Weak Global Cues, Ends Near Daily Low
Nifty Takes the Lead as Markets Keep Climbing
Indian Indices Survive Volatility with Marginal Gains

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