Israel-Iran Crisis Dampens Investor Sentiment, Bond Yields Rise

At the close, the Nifty 50 was at 22,147.90 down by 0.56%

On Tuesday, the NSE Nifty 50 commenced on a negative note, registering a decline of 0.56% and continued its downward trajectory throughout the trading session, closing below the 22,250 mark. This marks the third consecutive day of losses for the benchmark indices, as ongoing geopolitical tensions and concerns over US rate cuts persisted.

The slide in IT stocks, driven by diminishing expectations of early US rate cuts and apprehensions regarding the conflict in the Middle East, contributed significantly to the market downturn. The Nifty’s persistent decline reflects global market weakness exacerbated by escalating tensions in West Asia.

Furthermore, the surge in US treasury bond yields, reaching a five-month high, added to investors’ apprehensions about potential rate cuts by the US Federal Reserve this year. Heightened risk aversion stemming from the Israel-Iran crisis further dampened market sentiment, deterring investors from taking significant positions.

The domestic market’s consolidation trend was sustained amidst uncertainties surrounding geopolitical developments and the diminishing likelihood of immediate rate cuts. Stronger-than-expected US retail sales bolstered the assumption of delayed rate cuts, resulting in a surge in the dollar index and US bond yields, further impacting market dynamics.

The IT sector bore the brunt of market pressures, with concerns over weakened discretionary spending in the US and subdued domestic Q4 results weighing heavily on investor sentiment. As investors closely monitor March quarter results domestically, the market remains poised for continued volatility amid evolving global and domestic economic landscapes.

Bank Nifty: Down by 0.60%

The Bank Nifty commenced trading with a downturn, opening in the red with a decline of 0.60% and continued its downward trajectory throughout the session. It concluded the day’s trading at 47,484.80, sustaining losses and reflecting prevailing market sentiment.

Likewise, the BSE Sensex experienced a decline of 0.62%, mirroring the broader market trend. It closed in negative territory at a low of 72,943.68, signaling caution among investors amidst ongoing market volatility and economic uncertainties.

In the sectorial front, the media sector experienced a notable upswing, marking a 1.57% increase in recent market activity. Among the standout performers, Saregama India Ltd. surged impressively by 6.34%, showcasing robust investor confidence. Similarly, Zee Entertainment Enterprises Ltd. demonstrated a commendable gain of 3.84%, reinforcing positive sentiment within the sector.

Conversely, the IT sector faced challenges, emerging as the top loser with a decline of 2.58%. Notable entities such as Infosys Ltd. witnessed a dip of -3.61%, while Mphasis Ltd. experienced a decline of -3.52%.

Foreign Institutional Investors (FII/FPI) were net sellers in the market, with a sale value of Rs. 14,676.96 crore outweighing the buy value of Rs. 10,208.87 crore. This resulted in a net value of -Rs. 4,468.09 crore.

Conversely, Domestic Institutional Investors (DII) demonstrated a contrasting trend, emerging as net buyers in the market. They recorded a buy value of Rs. 13,537.42 crore against a sale value of Rs. 11,497.04 crore, resulting in a net value of Rs. 2,040.38 crore.

Bank Nifty

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

The gainers included HDFC Bank with a 1.16% increase, IDFC First Bank with a 0.42% increase. On the other hand, the biggest losers in the sector included Punjab National Bank with a 2.97% decline, IndusInd Bank with a 2.97% decline, AU Bank with a 2.39% decline, Bank of Baroda with a 2.18% decline, and Federal Bank with a 1.48% decline. These results suggest that most of the banking stocks not performed better for the day.

Rupee Slips Against Dollar Amidst Market Volatility

The Indian rupee faced depreciation, sliding by 14 paise to close at 83.57 against the US dollar on Tuesday. This decline was influenced by a negative trend in domestic equities and the dollar’s strength against major currencies worldwide, exacerbated by geopolitical tensions. Furthermore, a weak appetite for riskier assets and recent foreign capital outflows added downward pressure on the local unit.

Starting at 83.51, the rupee struggled throughout the day, eventually settling at 83.57, marking a 14-paise loss compared to its previous close. This downward trend continued from Monday, where the rupee had already declined by 6 paise against the US dollar, settling at 83.44.

The dollar index, which measures the greenback’s performance against six major currencies, saw a marginal increase to 106.23. This rise in the US dollar was attributed to various factors, including weakened yuan, subdued retail sales, and heightened demand for safe-haven assets amidst tensions between Iran and Israel.

Amidst these market fluctuations, Brent crude futures, the global oil benchmark, experienced a slight decline of 0.40%, reaching $89.74 per barrel. These developments underscore the importance of closely monitoring global economic and geopolitical dynamics to navigate currency and commodity markets effectively.

Stocks Highlights

Eicher Motors Ltd. witnessed a 3.05% increase in its share price, reaching Rs 4,348.00 from its previous close of Rs 4,219.35. Notably, the stock’s intraday trading history over the past 19 years reveals that only 2.34% of trading sessions experienced intraday declines higher than 5%. Moreover, the company has allocated less than 1% of its operating revenues towards interest expenses and 6.94% towards employee costs as of the fiscal year ending on March 31, 2023.

However, a sell signal has been triggered due to a bearish trend, indicated by a 5-day moving crossover that occurred recently. Historical data suggests an average price decline of -2.64% within 7 days following this signal over the past 5 years. Despite this, Eicher Motors has shown promising stock returns, boasting a 3-year return of 73.29% compared to Nifty 100’s return of 55.46%.

In contrast, Infosys Ltd. experienced a -3.61% decline in its share price, dropping to Rs 1,415.20 from its previous close of Rs 1,468.15. The company has also maintained minimal interest expenses, allocating less than 1% of its operating revenues towards this aspect. However, a significant portion (53.39%) of its operating revenues goes towards employee costs as of March 31, 2023.

In terms of stock returns, Infosys Ltd. has shown a 3-year return of 8.45%, falling short in comparison to Nifty 100’s return of 55.46%. These contrasting performances highlight the diverse dynamics within the market, urging investors to carefully assess company-specific factors alongside broader market trends for informed decision-making.

Advance Decline Ratio

Today, the advance-decline ratio was 1.55, and the market breadth was positive. The volatility index India Vix increased by 1.18 percent to settle at 12.62 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 1551
Decliners – 1002
200d SMA – 20605
50d SMA – 22163
20d SMA – 22284

Top Gainers and Losers Stocks

The top gainers were Eicher Motors (+3.05%), Hindustan Unilever (+1.65%), ONGC (+1.55%), Titan (+1.40%), and Divi’s Laboratories (+1.30%).

The top losers were Infosys (-3.61%), LTIM (-3.05%), IndusInd Bank (-2.97%), Bajaj Finserv (-2.32%), and Wipro (-2.25%).

Top Gainers and Losers Sector

The top gainers sector were Media (+1.57%), Oil & Gas (+0.60%), FMCG (+0.43%), Pharma (+0.42%), and Consumer Durables (+0.23%).

The top losers sector were IT (-2.58%), Metal (-0.54%), Realty (-0.46%), and Financial Services (-0.22%).

SECTORS – NOTABLE ACTION
MEDIA +1.57%
OIL & GAS +0.60%
FMCG +0.43%
IT -2.58%
METAL -0.54%
REALTY -0.46%

Stocks Ban List

(SEBI) F&O ban list (METROPOLIS open at -1765.00 and close at -1746.45), (EXIDEIND open at +410.00 and close at +459.80), (BANDHANBNK open at -173.10 and close at -173.85), (SAIL open at -149.50 and close at -149.30), (PEL open at -832.95 and close at +837.55), (ZEEL open at -141.35 and close at +147.70), (GNFC open at -682.70 and close at +683.95), (HINDCOPPER open at -351.00 and close at +357.45), (NATIONALUM open at -179.60 and close at +182.95), (BALRAMCHIN open at -366.00 and close at +373.35), and (INDIACEM open at +221.40 and close at +226.95) 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.

VEDL, BIOCON, TATACHEM, CANBK, MANAPPURAM, ABFRL, and INDUSTOWER stocks has the possibilities of entrance in the ban list.

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

Daily Pivots

As per the above pivots data, 21500 to 22300 is the Nifty 50 trading range.

Read previous -Daily Insights- here
NSE Nifty 50 Witnesses Decline Amidst Geopolitical Uncertainty
Nifty’s 1% Lower Finish amidst a Widespread Selloff
Nifty Hits Record High as Indian Equity Indices Close Higher Pre-FOMC Minutes

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