Market Bounces Back Strongly as Banks and Metals Lead the Way

At the close, the Nifty 50 was at 22,147.00 up by 0.69%

The NSE Nifty 50 commenced the day in the red but staged an impressive recovery, closing in the green with a notable uptick of 0.69%. Surpassing the 22,100 mark, the equity markets defied initial concerns surrounding Middle East tensions. Iran’s announcement of refraining from immediate retaliation against Israel, coupled with foreign investors’ short-covering, bolstered benchmark indices, particularly benefiting banking and metal sectors.

Market Resilience and Recovery Despite early reports of Israel’s retaliatory strike on Iran, which initially impacted market sentiment, the afternoon session witnessed a remarkable turnaround. The Nifty soared by 151.15 points, demonstrating resilience and breaking a four-day losing streak. Notably, a piercing line pattern on the daily chart suggests a bullish reversal, reinforced by the indicator surpassing the 55EMA, indicating a short-term moving average.

Challenges and Fragilities However, despite the market’s recovery, challenges persist. Elevated oil prices pose inflation risks, contributing to global economic uncertainty. Gold prices surged due to safe-haven demand, reflecting prevailing market fragility. Furthermore, foreign institutional investors (FIIs) continue to exhibit risk aversion, maintaining a trend observed since the previous week. Global sentiment remains subdued amidst a robust US economy and persistent inflation, dampening hopes of an imminent Federal Reserve rate cut.

Mid & Small Cap Sector Challenges Amidst the market’s recovery, mid and small-cap sectors experienced weakness, attributed to muted Q4 earnings expectations. Despite the overall market rebound, uncertainties persist, necessitating a cautious approach and diligent monitoring of global developments for informed investment decisions.

Bank Nifty: Up by 1.07%

The Bank Nifty initially opened in the red but demonstrated resilience, recording a notable increase of 1.07% by the end of the trading day. Closing at 47,574.15, the Bank Nifty showcased robust recovery, reflecting buoyancy in the banking sector despite initial market pressures. Similarly, the BSE Sensex commenced trading with a modest gain of 0.83% and closed in the green at a high of 73,088.33.

In the sectorial front, the Financial Services sector exhibited robust performance, surging by 1.31% in recent market activity. Notably, Bajaj Finance Ltd. marked a notable gain of 3.15%, while HDFC Bank Ltd. followed suit with a commendable increase of 2.64%.

Conversely, the Media sector experienced a downturn, declining by 1.02%. Nazara Technologies Ltd. encountered a notable loss, plummeting by -2.54%, alongside TV18 Broadcast Ltd., which saw a decrease of -2.23%.

Foreign Institutional Investors (FII/FPI) displayed a positive net value of Rs. 129.39 crore, with buy value reaching Rs. 16,285.77 crore and sale value at Rs. 16,156.38 crore. This indicates continued interest and confidence from global investors in Indian equities, contributing to market stability and growth prospects.

On the other hand, Domestic Institutional Investors (DII) experienced a negative net value of Rs. -52.50 crore, with buy value recorded at Rs. 9,396.68 crore and sale value at Rs. 9,449.18 crore. While this reflects a cautious approach or profit-taking behavior among domestic investors, it also highlights their significant role in shaping market dynamics.

Bank Nifty

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

The gainers included HDFC Bank with a 2.64% increase, ICICI Bank with a 1.19% increase, Axis Bank with a 0.75% increase, State Bank of India with a 0.70% increase, and IndusInd Bank with a 0.58% increase. On the other hand, the biggest losers in the sector included AU Bank with a 1.01% decline, Punjab National Bank with a 0.96% decline, Bank of Baroda with a 0.89% decline, IDFC First Bank with a 0.79% decline, and Federal Bank with a 0.16% decline. These results suggest that some of the banking stocks performed better for the day.

Rupee Shows Resilience, Closes Higher Against US Dollar

The Indian rupee exhibited resilience in the face of early losses, closing 4 paise higher at 83.48 against the US dollar, buoyed by a robust recovery in domestic equities. Initially dipping due to global risk aversion amid Middle East tensions, the rupee rebounded on reports of RBI intervention to support it.

Intervention Boosts Rupee Amid Global Uncertainty Forex traders noted that early losses were mitigated by RBI intervention, helping the rupee recover from its intraday low of 83.58 to reach a high of 83.46 against the greenback. This intervention follows concerns about geopolitical tensions and their impact on global markets.

Expectations and Market Outlook Despite uncertainties surrounding global crude oil prices and safe-haven demand for the US dollar, analysts anticipate the rupee to trade within a range of Rs 83.30 to Rs 83.80. While pressures persist, potential RBI interventions may lend support to the domestic currency at lower levels, offering stability amidst market volatility.

Brent Crude and Global Factors Brent crude futures saw a slight dip to USD 86.84 per barrel, influencing market sentiment. However, the interplay between geopolitical dynamics and global economic conditions remains critical in determining the rupee’s trajectory against the US dollar in the coming sessions.

Stocks Highlights

Bajaj Finance Ltd.’s share price surged by 3.15% from its previous close of Rs 6,893.20 to reach Rs 7,110.00. Notably, the company allocated 30.34% of its operating revenues towards interest expenses and 12.22% towards employee costs in the fiscal year ending March 31, 2023.

A recent sell signal emerged as the 50-day moving average crossed over, indicating potential bearish momentum. Historical data shows an average price decline of -5.17% within 30 days following this signal over the past five years. However, despite this, the stock delivered a commendable 3-year return of 53.88%, slightly trailing behind the Nifty 100, which yielded a return of 56.69%.

Conversely, Bajaj Auto Ltd.’s share price experienced a decline of -2.48%, dropping from Rs 9,021.30 to Rs 8,798.00. The company undertook new debt obligations for the first time in the last five years. Despite this, it showcased impressive revenue growth, with an annual revenue growth of 23.02%, outpacing its 3-year compound annual growth rate (CAGR) of 16.68%.

A buy signal emerged as the 14-day moving average crossed over, indicating bullish momentum. Historical data reveals an average price gain of 2.49% within 7 days following this signal over the past five years.

Advance Decline Ratio

Today, the advance-decline ratio was 0.83, and the market breadth was negative. The volatility index India Vix increased by 3.20 percent to settle at 13.46 and the FIIs were net buyers today.

DAILY MARKET ACTION
Advancers – 1162
Decliners – 1396
200d SMA – 20639
50d SMA – 22173
20d SMA – 22287

Top Gainers and Losers Stocks

The top gainers were Bajaj Finance (+3.15%), M&M (+2.92%), HDFC Bank (+2.64%), Maruti (+2.30%), and JSW Steel (+2.27%).

The top losers were Bajaj Auto (-2.48%), Nestle India (-1.32%), Divi’s Laboratories (-1.32%), HCL Technologies (-1.16%), and Larsen & Toubro (-1.07%).

Top Gainers and Losers Sector

The top gainers sector were Financial Services (+1.31%), Metal (+0.96%), Consumer Durables (+0.49%), FMCG (+0.44%), and Auto (+0.41%).

The top losers sector were Media (-1.02%), Realty (-0.70%), Pharma (-0.65%), IT (-0.39%), and Oil & Gas (-0.22%).

SECTORS – NOTABLE ACTION
FINANCIAL SERVICES +1.31%
METAL +0.96%
CONSUMER DURABLES +0.49%
MEDIA -1.02%
REALTY -0.70%
PHARMA -0.65%

Stocks Ban List

(SEBI) F&O ban list (IDEA open at -12.90 and close at -12.90), (EXIDEIND open at -449.65 and close at -444.30), (METROPOLIS open at -1710.00 and close at -1739.65), (ZEEL open at -143.15 and close at -142.85), (PEL open at -830.10 and close at -835.15), (BANDHANBNK open at -172.00 and close at +173.55), (SAIL open at -142.90 and close at +146.05), (HINDCOPPER open at -355.00 and close at +364.10), (BALRAMCHIN open at -366.00 and close at -365.65), (GNFC open at -672.45 and close at +682.35), and (NATIONALUM open at -180.00 and close at +184.80) 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.

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

HINDCOPPER, BALRAMCHIN, GNFC, and NATIONALUM stocks has the possibilities of exit from the ban list.

Daily Pivots

As per the above pivots data, 21500 to 22400 is the Nifty 50 trading range.

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