Indian Markets Break Free from Losing Streak—Can IT Stocks Sustain the Rally?

At the close, the Nifty 50 was at 24,143.75 up by 0.02%

On August 14, the NSE Nifty 50 opened in the green, rising 0.02% to close at 24,143.75. Despite an early climb towards 24,200, the index ended flat, forming a small red candle—a hint that the recent downward slide might be pausing. While IT stocks lifted the market, the metal sector dragged it down, resulting in a mixed session.

This flat close follows two days of losses, with Indian equities showing some resilience due to IT buying. However, broader indices like the Nifty Midcap 100 and Smallcap 100 fell over 0.5%, underlining a cautious market sentiment.

Global cues were positive, fueled by softer US PPI data that hinted at easing inflation and potential Fed rate cuts. Yet, domestic concerns, particularly the Supreme Court’s tax royalty ruling that hit metal stocks, kept the mood wary.

Traders remain cautious, awaiting the upcoming US CPI data and the Fed’s rate decision. If the Fed cuts rates by 50 basis points, it could lift global markets and the Nifty. However, if the Fed holds off, a sell-off may follow, impacting markets worldwide.

As markets close tomorrow for Independence Day, the suspense lingers: Will the Nifty 50 break past 24,250, or face more sideways action?

Bank Nifty: Down by 0.21%

In a mixed trading session, the Bank Nifty and BSE Sensex moved in opposite directions, leaving investors to reassess their strategies. The Bank Nifty opened in the red, down by 0.21%, and continued its downward trajectory, closing at 49,727.30.

Conversely, the BSE Sensex defied the downward trend in banking stocks, rising by 0.19% and closing at a new high of 79,105.88.

In the sectorial front, the Information Technology (IT) sector emerged as a clear winner, registering an impressive gain of 1.58%. Industry giants like Tata Consultancy Services Ltd. (TCS) and HCL Technologies Ltd. led the charge, posting gains of 2.29% and 1.96% respectively.

But while IT soared, the metal sector faced a rough patch, becoming the top loser with a decline of 1.26%. The drop was sharply felt by companies like NMDC Ltd., which saw its stock plummet by 6.00%, and Hindustan Copper Ltd., which lost 4.27%.

Foreign Institutional Investors had a net sell value of Rs. 2,595.27 crore. They bought stocks worth Rs. 14,970.00 crore but sold off Rs. 17,565.27 crore.

In contrast, Domestic Institutional Investors showed a more optimistic approach. With a net buy value of Rs. 2,236.21 crore, DIIs purchased shares worth Rs. 12,269.21 crore and sold Rs. 10,033.00 crore.

Bank Nifty

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

The gainers included State Bank of India with a 0.71% increase, HDFC Bank with a 0.29% increase, Federal Bank with a 0.15% increase.

On the other hand, the biggest losers in the sector included Bandhan Bank with a 1.31% decline, AU Bank with a 0.97% decline, IDFC First Bank with a 0.81% decline, Bank of Baroda with a 0.68% decline, and ICICI Bank with a 0.61% decline. These results suggest that most of the banking stocks not performed better for the day.

Gold and Silver Rate (INR) 14th August, 2024

Rupee Edges Higher Amid Dollar Weakness: Will Geopolitical Tensions Hold It Back?

The Indian Rupee showcased a rollercoaster ride on August 14th, ultimately closing with a modest 2 paise gain against the US Dollar at 83.95. The day’s performance was a delicate balancing act between several global and domestic factors.

A sharp decline in the US Dollar against major currencies provided initial tailwinds for the Rupee. This, coupled with a generally positive domestic market sentiment, pushed the Indian currency upwards. However, persistent foreign fund outflows and escalating geopolitical tensions in the Middle East acted as counterweights, limiting the Rupee’s upside.

Looking ahead, the Rupee’s trajectory appears uncertain. Rising commodity prices and heightened tensions in the Middle East could exert downward pressure. On the other hand, a weakening US Dollar and the prospect of a Federal Reserve rate cut might offer some support. Global market trends will also play a crucial role in determining the Rupee’s fate.

The US Dollar Index slipped by 0.13% to 102.42, primarily due to a softer-than-expected US Producer Price Index (PPI) report. This development has raised expectations of further Dollar weakness. Meanwhile, Brent crude oil prices inched up by 0.28% to $80.92 per barrel.

The interplay of these factors will be closely watched by market participants in the coming days. Will the Rupee manage to sustain its upward momentum, or will it succumb to the prevailing headwinds?

Stocks Highlights

Tata Consultancy Services Ltd. (TCS) and Divi’s Laboratories Ltd. saw contrasting performances, leaving investors to ponder their next moves. TCS shares climbed by 2.29%, closing at Rs 4,293.00, up from their previous close of Rs 4,196.95. This rise is significant in light of the company’s strong fundamentals, such as a zero-debt status maintained over the last five years.

However, a 20-day moving average crossover that appeared on August 12, 2024, could be a cause for caution. Historically, TCS has seen an average price decline of -2.01% within seven days following this signal, suggesting that bears may be back in action.

On the other hand, Divi’s Laboratories Ltd. experienced a drop of -4.03%, closing at Rs 4,666.00, down from Rs 4,861.80. This decline is noteworthy as intraday drops of over 5% have been rare, occurring in only 1.44% of trading sessions over the past 19 years.

A recent 5-day moving average crossover, which typically precedes a bearish trend, suggests that further declines could be on the horizon. Historically, Divi’s Labs has seen an average price decrease of -2.21% within seven days of this signal.

Comparing these two stocks against broader market trends, TCS appears more resilient, supported by its robust financial health and consistent performance. In contrast, Divi’s Labs has underperformed, delivering a three-year return of -1.76% compared to the Nifty 100’s impressive 51.87% gain.

Advance Decline Ratio

Today, the advance-decline ratio was 0.55, and the market breadth was negative. The volatility index India Vix decreased by 4.40 to settle at 15.46 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 952
Decliners – 1727
52Wk High – 66
52Wk Low – 49
High Band Hitters – 88
Low Band Hitters – 109
200d SMA – 22177
50d SMA – 24055
20d SMA – 24490

Top Gainers and Losers Stocks

The top gainers were TCS (+2.29%), HCL Technologies (+1.96%), Tech Mahindra (+1.47%), Infosys (+1.25%), and M&M (+1.16%).

The top losers were Divi’s Laboratories (-4.03%), Hero MotoCorp (-3.17%), Coal India (-3.00%), UltraTech Cement (-2.35%), and Dr. Reddy (-2.14%).

Top Gainers and Losers Sectors

The top gainers sector were IT (+1.58%), Consumer Durables (+0.11%), and Auto (+0.05%).

The top losers sector were Metal (-1.26%), Media (-1.06%), Pharma (-0.81%), Oil & Gas (-0.76%), and Realty (-0.48%).

SECTORS – NOTABLE ACTION
IT +1.58%
CONSUMER DURABLES +0.11%
AUTO +0.05%
METAL -1.26%
MEDIA -1.06%
PHARMA -0.81%

Stocks Ban List

(SEBI) F&O ban list (AARTIIND close at -599.00), (INDIACEM open at close at -365.70), (SUNTV close at -813.10), (CHAMBLFERT close at -486.05), (LICHSGFIN close at -643.55), (ABFRL close at -311.10), (SAIL close at -125.23), (GRANULES close at -669.30), (BANDHANBNK close at -189.99), (MANAPPURAM close at -201.51), (BIOCON close at -327.65), (INDIAMART close at -2673.35), (PNB close at -113.57), (RBLBANK close at -205.67), (BSOFT close at +566.00), and (ABCAPITAL close at -203.47) 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.

GNFC, EXIDEIND, PEL, IDFCFIRSTB, IEX, BATAINDIA, SBICARD, NMDC, NATIONALUM, CONCOR, IDEA, and BANKBARODA stocks has the possibilities of entrance in the ban list.

BSOFT, and ABCAPITAL stocks has the possibilities of exit from the ban list.

Daily Pivots

As per the above pivots data, 23950 to 24300 is the Nifty 50 trading range.

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