Nifty 50 Falls Below Key Levels –  Is the Worst Yet to Come? Will Geopolitical Risks Disturb the Markets?

At the close, the Nifty 50 was at 24,795.75 down by 0.87%

October 07, 2024. Today, the NSE Nifty 50 opened with promise but quickly fell into the red, closing down by a striking 0.87 percent. The Nifty50 now stands below 24,800, marking yet another volatile session in a string of losses that have extended to six consecutive days. Investor sentiment has soured, influenced heavily by the escalating conflict in the Middle East, leaving many on edge.

At the closing bell, the Nifty was down 218.85 points, closing at 24,795.75. Although the market opened higher due to positive global cues, it swiftly erased all gains, oscillating between ups and downs before settling near its day’s low.

In today’s turmoil, investors saw their wealth plummet by an astonishing Rs. 8.99 lakh crore. The market capitalization of BSE-listed companies dwindled to Rs. 452.27 lakh crore, a significant drop from Rs. 461.26 lakh crore in the previous session.

What Lies Ahead for Investors?

Benchmark equity indices surrendered their initial gains, ending in the red after a widespread sell-off across sectors, with only IT stocks resisting the downward pull. A long bear candle emerged on Nifty’s daily chart, signaling a potential continuation of steep downside momentum. The positive patterns that once hinted at recovery have been eclipsed, as the index plunged below the last higher bottom of 24,753.

It felt like a wild ride: the index initially soared higher, only to face relentless selling pressure in the Mid and Smallcap segments. The Nifty50 ultimately lost the crucial psychological support of 25,000. As a series of bearish candles accumulate, Nifty50 added yet another red candle, forming a Three Black Crows pattern.

Can the market find its footing? Only a strong, sustainable move above 25,000 will confirm a trend reversal; until then, the bears are in charge, with the next support looming at 24,400.

Are Geopolitical Concerns the Root of Our Troubles?

The Nifty’s decline can be attributed to ongoing geopolitical concerns, further exacerbated by a bearish crossover in the RSI, indicating an unfavorable trend. The market outlook remains predominantly bearish, suggesting a “Cash out on gains” strategy as long as it hovers below 25,000.

On October 7, the Nifty 50 decisively breached the psychological 25,000 mark, signaling a grim start to the week. The bears are tightening their grip, and all sectors, except IT, participated in this correction. With ongoing lower highs and lows, weakening momentum indicators, and rising volatility, the stakes are high if the index fails to defend 24,750 on a closing basis.

The day began on a high note, opening at 25,084 and reaching a peak of 25,143, but after the first hour, the index flipped completely red, breaking the September low of 24,750 intraday. It managed to close at 24,796, down 219 points, forming a long bearish candlestick pattern with above-average volumes, signaling more weakness ahead.

Is the Indian Market Ready for a Shift?

The volatility index, India VIX, surged 6.74 percent to close at 15.08, its highest since September 6. This adds a layer of uncertainty, making the Indian markets vulnerable to underperforming compared to their Asian peers.

As we enter a consolidation phase, the risk of underperformance looms large, especially with premium valuations leading to significant corrections. Notably, there’s a growing trend of global arbitrage as Chinese markets attract substantial inflows, prompting investors to reassess their positions amid outflows from foreign institutional investors.

What Will the RBI Decide?

In light of these challenges, the Reserve Bank of India (RBI) is convening its Monetary Policy Committee (MPC) on October 7, with a decision expected on October 9. While the tensions between Israel and Iran escalate, experts believe the RBI is unlikely to delay a change in stance. With the marginal impact on crude oil prices, the central bank may opt for a “neutral” stance in its December policy meeting, keeping rates steady in October.

Is the market headed for a rocky road ahead, or is there hope for a turnaround? With all eyes on the US elections and potential tariff changes affecting global supply chains, one can’t help but wonder: What will it take for the market to regain its footing? Only time will tell.

Bank Nifty: Down by 1.91%

The market turbulence continues as both Bank Nifty and BSE Sensex opened and closed in the red. Bank Nifty faced a steep fall, dropping by 1.91%, and closed at 50,478.90, signaling continued selling pressure on banking stocks. Meanwhile, the BSE Sensex also struggled, slipping by 0.78% to close at 81,050.00, further amplifying concerns about market stability.

On the sectoral front, the Information Technology (IT) sector shines with a solid gain of 0.66%. Leading the pack, LTIMindtree Ltd. witnessed an impressive rise of 2.22%, followed by Persistent Systems Ltd., which climbed 1.92%.

On the flip side, the Media sector has not been as fortunate. Facing a significant decline of 3.65%, this sector has become today’s biggest loser. Within it, Nazara Technologies Ltd. took a heavy hit, sliding by 5.47%, and Network18 Media & Investments Ltd. followed closely behind with a drop of 4.98%.

The FIIs recorded a net outflow of Rs. 8,293.41 crore, with a buy value of Rs. 14,057.25 crore against a sale value of Rs. 22,350.66 crore.

DIIs displayed a strong buying interest, amassing a net inflow of Rs. 13,245.12 crore. With a buy value of Rs. 23,924.07 crore and a sale value of Rs. 10,678.95 crore.

Bank Nifty

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

The gainers included AU Bank with a 1.76% increase, and IDFC First Bank with a 0.79% increase.

On the other hand, the biggest losers in the sector included Federal Bank with a 4.99% decline, Canara Bank with a 3.56% decline, Punjab National Bank with a 3.45% decline, Bank of Baroda with a 2.87% decline, and State Bank of India with a 2.84% decline. These results suggest that most of the banking stocks not performed better for the day.

Gold and Silver Rate (INR) 7th October, 2024

Will the Rupee Maintain Its Momentum Amid Global Tensions?

A Small Victory for the Rupee
The Indian rupee has climbed 2 paise to 83.97 against the US dollar in early trade, driven by a softer greenback in international markets and falling crude oil prices. Could this be a sign of strength for the rupee, or are there storms on the horizon?

The rupee opened at 83.96 at the interbank foreign exchange, 3 paise higher than its previous close of 83.99. Although it slipped by 1 paisa to settle at 83.97, it still shows an overall gain of 2 paise from Friday’s close.

Forex Reserves Hit Record High!
Another boost for the rupee came from India’s foreign exchange reserves, which surged to an all-time high of $704.88 billion as of September 27, reflecting a substantial increase of $12.588 billion. But can this positive momentum withstand external pressures?

Caution Ahead
Despite these gains, concerns loom large. The escalating conflict in the Middle East and outflows from Foreign Institutional Investors (FIIs) on Friday could limit any sharp increases in the rupee’s value. Will these geopolitical tensions cap the rupee’s ascent?

Meanwhile, the dollar index edged down 0.01% to 102.50, while Brent crude prices dropped 0.44% to $77.71 in futures trading. As the markets evolve, where will the rupee find its footing next?

Stocks Highlights

Trent Ltd. just gave investors a reason to perk up! The share price climbed by 1.86%, closing at Rs. 7,489.90, up from its previous close of Rs. 7,353.30. But here’s the twist: despite this rise, the stock’s Return on Equity (ROE) has soared to an impressive 36.55% for the year ending March 31, 2024, significantly outperforming its 5-year average of 14.67%. Can this growth be sustained, or will market forces pull it back?

Yet, before you get too excited, there’s a cautionary signal flashing in the background. A weekly stochastic crossover emerged on the week ending October 4, 2024, suggesting that bears might roar back into action. Historically, this signal has led to an average price decline of -6.48% within just seven weeks in the last ten years. Will history repeat itself?

On the financial front, the company has allocated 2.58% of its operating revenues to interest expenses and 8.38% to employee costs for the year ending March 31, 2024. Are these expenses sustainable, or are they tightening the financial leash?

Adani Enterprises Ltd. has hit a rough patch, with the share price dropping by -3.20%, landing at Rs. 3,011.00 from its previous close of Rs. 3,110.65. What’s behind this fall? The company is facing a topline contraction, with sales decreasing by a staggering 28.87%. This is the first time in three years that the company has reported a revenue contraction. Is this the beginning of a downward spiral?

Moreover, the company’s financial strategy is raising eyebrows. In the year ending March 31, 2024, 4.72% of its operating revenues went to interest expenses, and only 2.42% was spent on employee costs. Are these figures sustainable in the long run, or do they signal deeper issues?

Investors, take heed! With Trent Ltd. riding a wave of uncertainty and Adani Enterprises facing troubling trends, the market is rife with questions. Are you prepared for the twists and turns ahead?

Advance Decline Ratio

Today, the advance-decline ratio was 0.13, and the market breadth was negative. The volatility index India Vix increased by 6.74 to settle at 15.08 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 334
Decliners – 2502
52Wk High – 56
52Wk Low – 131
High Band Hitters – 54
Low Band Hitters – 420
200d SMA – 23147
50d SMA – 25042
20d SMA – 25499

Top Gainers and Losers Stocks

The top gainers were Trent (+1.86%), M&M (+1.48%), Bharti Airtel (+1.32%), ITC (+1.28%), and Bajaj Finance (+0.67%).

The top losers were Adani Ports (-4.29%), BEL (-3.54%), Adani Enterprises (-3.20%), Coal India (-3.18%), and NTPC (-3.10%).

Top Gainers and Losers Sectors

The top gainers sector were IT (+0.66%).

The top losers sector were Media (-3.65%), Oil & Gas (-2.27%), Metal (-2.24%), Consumer Durables (-1.91%), and Financial Services (-1.70%).

SECTORS – NOTABLE ACTION
IT +0.66%
MEDIA -3.65%
OIL & GAS -2.27%
METAL -2.24%

Stocks Ban List

(SEBI) F&O ban list (GNFC close at -631.70), (GRANULES close at -548.15), (HINDCOPPER close at -311.60), (MANAPPURAM close at -182.75), (RBLBANK close at -190.47), (BSOFT close at -566.95), and (BANDHANBNK close at -184.34) 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.

IDFCFIRSTB, PNB, SAIL, TATACHEM, BALRAMCHIN, and CHAMBLFERT stocks has the possibilities of entrance in the ban list.

Daily Pivots

As per the above pivots data, 24400 to 25100 is the Nifty 50 trading range.

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Is the Nifty 50 Bearish, or Is Hope on the Horizon? Are Geopolitical Tensions Threatening Indian Market Stability?
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This article is only for educational purposes and is not an investment advice.