More Curbs, Hikes, Export Ban and Exemptions

More Curbs, Hikes, Export Ban and Exemptions

Today, the market started trading in positive territory but turned volatile and closed in red for the third consecutive day. The high volatility could be because of the monthly options expiry week. On the news side, it was more curbs, rate hikes, export ban and duty exemptions to fight inflation.

The Nifty 50 closed at 16,025.80, down 99.35 points or 0.62 per cent. It made an intraday high of 16223 and a low of 16007. Similar to yesterday, it again gave a bearish signal and made a lower high and a lower low compared to yesterday’s prices. Meanwhile, Nifty Bank stayed in the green and closed with marginal gains of 0.14 per cent.

Today, the government has allowed the duty-free import of soybean and sunflower oil, and the government has put restrictions on sugar exports. The ban on wheat exports is already in place. Similarly, there is a possibility of a cotton export ban as the cotton prices are rising. On a distinct note, Indonesia has already put a temporary ban on palm oil exports.

The market breadth remained in favour of the declining shares, and the advance-decline ratio was low at 0.20. Though, the volatility index softened a little by 1.37 per cent to close at 25.28. As noted in yesterday’s note, going by the Rule of 16, such high volatility shows that the market can move about 1.6% in any direction in the upcoming trading sessions.

Nifty Market Action
Advancers – 352
Decliners – 1799
52Wk High – 12
52Wk Low – 148
High Band Hitters – 38
Low Band Hitters – 216
200d SMA – 17262
50d SMA – 16938
20d SMA – 16365

Nifty Top Gainers and Losers

NTPC, HDFC Life, SBI Life, Bharti Airtel and ONGC were the top gainers, and Asian Paints, Adani Ports, Divis Labs, UPL, and Tech Mahindra were the top losers. Yesterday also the shares of Divis Labs and Tech Mahindra were on the top losers list.
View the list of all the Nifty 50 contributors.

Top Gainers

Top Losers

Nifty Sectors and Broader Indices

Except for bank and financial services, all sectoral indices closed in the red. The IT, Media and Realty sectors were under pressure and closed about 3 per cent lower. The metals continued to drag after the export duty levy on certain steel products.

The broader market was also under pressure and closed in the red. Small-cap shares witnessed heavy selling, and the small-cap 50 was down 3.99 per cent, whereas the Nifty Midcap 50 was down 1.83 per cent.

Nifty Sectors – Notable Action
Financial Services 25/50 +0.70%
Financial Services +0.68%
Private Bank +0.27%
IT -3.38%
Realty -2.88%
Media –2.86%

Export Ban and Exemptions because of Rising Inflation

Allowing duty-free import of vegetable oil is positive news because of the high dependency on imported cooking oil. India is one of the largest importers of vegetable oil. We rely on imports for 60 per cent of our domestic consumption. Though it could affect the prices of some stocks, Ruchi Soya is down by -4.98%, Adani Wilmar down by -4.99% etc.
 
Similarly, restriction on sugar export is positive for the consumers as the sugar prices may stabilize or even come down. Whereas, this could be negative for the sugar stocks; Dalmia Bharat Sugar is down by -15.31%, Balrampur Chini is down by -8.85%, Shree Renuka Sugars is down by -6.69%, Dhampur Sugar is down by -5.00%, and Bajaj Hindusthan Sugar down by -4.88%.

Daily Pivots

15950 to 16150 is the Nifty trading range for tomorrow. Same as yesterday, there was high volatility, low advance-decline ratio, more 52-week low shares, and more low-band hitters. More curbs, rate hikes, export bans and duty exemptions announced to fight inflation. Is this enough to tame the inflation or is it too little too late ?