Is the Nifty’s three-day plunge signaling a storm ahead or a hidden opportunity? What’s next?

At the close, the Nifty 50 was at 24,854.05 up by 0.42%

In a stunning reversal, the NSE Nifty 50 started in the red today, up by 0.42%, and close in the green, above the crucial 24,850 mark. But the real question is: Is this just a temporary recovery, or have we finally hit the market bottom?

A positive candle formed on the daily chart, hinting at a possible short-term reversal. The minor lower shadow in the pattern suggests that the market is preparing for an upside bounce after recent corrections. Interestingly, Friday’s chart signals the formation of a bullish piercing line-type pattern—a classic indicator of a potential shift in momentum.

Bulls, Are You Ready for a Comeback?

Friday’s recovery may have set the stage for a bullish comeback, as the market’s sustainable upmove could act as a catalyst for further gains. The real test lies ahead: Will this rally hold and confirm a critical bottom reversal pattern?

After a weak start, Indian stock markets staged an impressive recovery, thanks to a firm rally in banking and financial shares. The Nifty 50 managed to erase all its opening losses, breaking its three-day losing streak, to end higher on Friday. Could this be the start of something bigger?

Key Sector Performances:

• Banking, Financial, and Metal stocks led the charge, offsetting losses in the IT sector.
• The NSE Nifty closed up 104.20 points at 24,854, recovering from a day’s low of 24,567.65 to hit a day’s high of 24,886.20—a more than 300-point recovery.

But here’s the twist: The broader markets outperformed, raising the stakes for what comes next.

Resistance Ahead or Smooth Sailing?

“A decisive move above 24,900 could trigger a short-term rally, but can Nifty hold the line?” Market analysts are now watching this crucial resistance level, which previously acted as support, to determine if the bulls can carry the momentum forward.

A positive divergence on the RSI (14) indicates a shift toward positive price momentum, further suggesting that the market could be ready to break out of its recent slump.

Driving Forces Behind the Bounce

• A bounce back from oversold levels, led by selective buying in financial, auto, and metal stocks, turned the tide after the morning sell-off.
• Early results from private banks have been optimistic, building expectations for a strong earnings season.
• Global cues also played their part, with China’s Q3 GDP numbers offering a slightly better-than-expected boost, and consecutive rate cuts by the ECB supporting rate-sensitive stocks.

The Million-Dollar Question:

Will the market sustain this rebound? Or is this just a temporary reprieve before another downturn?

Bank Nifty: Up by 1.57%

In a refreshing turn of events, the Bank Nifty opened lower but managed to gain momentum, closing up by 1.57% at 52,094.20. This impressive recovery reflects the strength of banking stocks, contributing to a positive sentiment in the market.

Similarly, the BSE Sensex also showcased resilience, rising by 0.27% to close at a high of 81,224.75.

In the sectorial front, the metal industry experienced a robust surge, gaining an impressive 1.57% overall. This upward trend was led by Jindal Steel & Power Ltd., which soared by 3.76%, followed closely by NMDC Ltd., whose shares climbed by 3.34%.

Conversely, the IT sector struggled significantly, emerging as the day’s biggest loser with a decline of 1.47%. Within this troubled landscape, LTIMindtree Ltd. bore the brunt of the downturn, plummeting by 6.06%. This stark contrast in performance raises questions about the future of tech stocks, especially when giant firms like Infosys Ltd. also saw a decline, losing 4.22% of their value.

FIIs recorded a buy value of Rs. 12,348.95 crore, but their sale value stood at Rs. 17,834.65 crore, resulting in a net outflow of Rs. 5,485.70 crore. This indicates a considerable sell-off by foreign investors, raising questions about their market outlook.

Conversely, DIIs displayed stronger buying interest with a buy value of Rs. 13,850.16 crore against a sale value of Rs. 8,635.33 crore, leading to a net inflow of Rs. 5,214.83 crore.

Bank Nifty

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

The gainers included Axis Bank with a 5.75% increase, ICICI Bank with a 2.90% increase, Bank of Baroda with a 2.29% increase, Canara Bank with a 2.05% increase, and State Bank of India with a 1.10% increase.

On the other hand, the biggest losers in the sector included AU Bank with a 0.52% decline, IDFC First Bank with a 0.26% decline. These results suggest that almost all of the banking stocks performed better for the day.

Gold and Silver Rate (INR) 18th October, 2024

Rupee on a Tightrope: Depreciation to Aid Exports or Will Rising Inflows Shift the Balance?

The rupee finds itself with room to depreciate further, which could offer a significant advantage to India’s exports, particularly as the country seeks a larger slice of the global goods market. A weaker currency could enhance India’s competitiveness on the global stage.

However, the rupee is treading through a tricky environment. While there’s potential for further depreciation, appreciation pressures are also building. This is largely driven by strong capital inflows, as India continues to be an attractive destination for portfolio investments.

“There’s a perception,” experts say, “that a stronger currency signals a stronger economy,” adding complexity to the rupee’s trajectory.

Last week, the rupee slipped below the 84 mark against the US dollar for the first time, but has managed to hold just above 84 since then.

Will the rupee’s slide continue, providing a much-needed edge for exports, or will surging investments drive it back up? The outcome remains uncertain as these opposing forces pull the currency in different directions.

Stocks Highlights

Axis Bank Ltd. has made a bold statement, with its share price surging 5.75% from the previous close of Rs. 1,131.85. The stock is now trading at an intriguing Rs. 1,196.95. But wait—what’s driving this momentum? Loan Book Growth is off the charts, boasting a 15.08% year-on-year increase, outpacing its five-year CAGR of 11.38%.

But before you dive in, consider this: while the annual revenue growth of 29.99% is exhilarating, eclipsing the three-year CAGR of 19.29%, there’s a lurking shadow. The ominous sell signal has appeared, as a 200-day moving crossover emerged just yesterday. History shows a chilling average price decline of -3.49% within 30 days of this signal over the past five years.

Infosys Ltd. finds itself in a different scenario. The stock has tumbled 4.22% from its last close of Rs. 1,968.10, now standing at Rs. 1,885.00. What’s behind this downturn? Employee and interest expenses tell a curious tale: the company spent less than 1% of its operating revenues on interest but a staggering 53.76% on employee costs for the fiscal year ending March 31, 2024.

Yet, there’s a flicker of hope. A buy signal has emerged, as a 20-day moving crossover appeared yesterday, historically leading to an average price gain of 2.57% within just 7 days over the last five years. But how does this compare to the broader market? Stock returns versus Nifty 100 paint a sobering picture: while Infosys delivered a 3-year return of 14.71%, Nifty 100 soared with 40.02%.

Advance Decline Ratio

Today, the advance-decline ratio was 0.90, and the market breadth was negative. The volatility index India Vix decreased by 2.61 to settle at 13.04 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 1303
Decliners – 1443
52Wk High – 56
52Wk Low – 48
High Band Hitters – 76
Low Band Hitters – 68
200d SMA – 23306
50d SMA – 25105
20d SMA – 25373

Top Gainers and Losers Stocks

The top gainers were Axis Bank (+5.75%), Wipro (+3.59%), Eicher Motors (+2.98%), ICICI Bank (+2.90%), and Shriram Finance (+2.80%).

The top losers were Infosys (-4.22%), Britannia (-1.98%), Asian Paint (-1.87%), Nestle India (-1.21%), and Tech Mahindra (-0.82%).

Top Gainers and Losers Sectors

The top gainers sector were Metal (+1.57%), Financial Services (+1.50%), Media (+1.38%), Auto (+0.62%), and Pharma (+0.44%).

The top losers sector were IT (-1.47%), FMCG (-0.51%), Oil & Gas (-0.20%).

SECTORS – NOTABLE ACTION
METAL +1.57%
FINANCIAL SERVICES +1.50%
MEDIA +1.38%
IT -1.47%
FMCG -0.51%
OIL & GAS -0.20%

Stocks Ban List

(SEBI) F&O ban list (BANDHANBNK close at -190.19), (IEX close at -191.16), (LTF close at -166.41), (TATACHEM close at -1073.85), (GNFC close at -639.20), (CHAMBLFERT close at -500.30), (PNB close at +225.17), (MANAPPURAM close at -102.46), (NATIONALUM close at +177.33), (HINDCOPPER close at -317.20), (SAIL close at -127.83), (GRANULES close at -594.45), (IDFCFIRSTB close at -71.74), and (RBLBANK close at -202.45) 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, EXIDEIND, BSOFT, ABFRL, NMDC, GMRINFRA, PEL, LICHSGFIN, ESCORTS, CANBK, ADANIENT, and BIOCON stocks has the possibilities of entrance in the ban list.

MANAPPURAM, NATIONALUM, HINDCOPPER, SAIL, GRANULES, IDFCFIRSTB, and RBLBANK stocks has the possibilities of exit from the ban list.

Daily Pivots

As per the above pivots data, 24500 to 25100 is the Nifty 50 trading range.

Read Previous -Daily Insights- here
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Is the Nifty at a Tipping Point? Indices Decline as the Nifty Struggles to Stay Afloat—Can it Overcome the Downtrend?

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