Nifty Dips Amid Global Caution—Will US Jobs Data Shake the Market?

At the close, the Nifty 50 was at 24,852.15 down by 1.17%

September 6, 2024. The Indian stock market tumbled today, catching many investors off guard. The NSE Nifty 50 plunged by 1.17%, closing at 24,852.15, wiping out nearly 293 points. This marks the third straight day of losses—but why is everyone so cautious?

Investors are anxiously awaiting the release of the US jobs data. This report could be the key to unlocking the Federal Reserve’s next move on interest rates. Will it provide relief or trigger another wave of uncertainty?

Global cues weren’t helping either. A weak trend in the US markets, rising crude oil prices, and fresh regulatory concerns weighed heavily on Indian stocks. The Nifty didn’t just slip—it dipped below the crucial 20-day exponential moving average, hitting the 24,800 support zone. This level also aligns with the 38.2% Fibonacci retracement, signaling a potential downward spiral in the coming sessions.

Sectors across the board suffered, with banking and energy stocks bearing the brunt. Investors seemed eager to lock in profits after the recent rally, pushing the India VIX up by 6.49%—a clear sign that anxiety is mounting.

What about SEBI’s regulatory changes? New rules for the futures and options segment, aimed at limiting retail speculation, are causing a ripple of uncertainty. Will these changes raise trading costs and spook investors further?

As the spotlight shifts to the US non-farm payrolls data, the big question remains: Will this jobs report stabilize the market or stir up more volatility?

Stocks Plummet

Today, September 6, the stock market took a nosedive. The Nifty crashed by 293 points, settling at 24,852. This marks the third consecutive day of losses. Investors are reeling from a Rs 5 lakh crore loss. The BSE market cap dropped from Rs 465.68 lakh crore to Rs 460.59 lakh crore. State Bank of India (SBI) and Reliance Industries (RIL) were among the biggest losers.

What’s Driving the Decline?

1. U.S. Data Dilemma
Tonight, crucial employment data from the U.S. will be released. This data could influence upcoming decisions by the U.S. Federal Reserve. With the Fed meeting this month, investors are wary. Recent negative U.S. economic data has already sparked declines, leading to hesitation in taking new positions.

2. Global Market Slowdown
Investor sentiment is bleak, reflecting global market downturns. Last night, all three major U.S. indexes fell. Asian markets followed suit, with South Korea’s Kospi, China’s Shanghai Composite, Japan’s Nikkei-225, and Hong Kong’s Hang Seng all in the red.

3. Profit Booking After a Rally
After 14 consecutive days of Nifty gains and 8 days of Sensex rises, profit booking has kicked in. Midcap and smallcap indices hit all-time highs during this rally, leading to an ‘overbought’ condition and subsequent selling.

4. Overvaluation Concerns
Valuations are now high, especially in midcap and smallcap segments. Historically, the small-cap index corrects every 3-4 years, and we’re in the fifth year of this boom. Many stocks’ valuations are becoming hard to justify, leading to continued profit-booking and market correction.

Bank Nifty: Down by 1.74%

Today, the Indian stock markets faced notable setbacks, with the Bank Nifty and BSE Sensex both ending the session in the red. The Bank Nifty opened lower and dropped by 1.74%, ultimately closing at 50,576.85. Similarly, the BSE Sensex fell by 1.24%, settling at 81,183.93.

Today, the sectorial landscape paints a bleak picture with no gainers in sight. The Oil & Gas sector emerged as the top loser, down by -2.16%. Within this struggling sector, Oil India Ltd. faced a steep drop of -4.11%, while Aegis Logistics Ltd. followed closely with a loss of -3.80%.

Foreign Institutional Investors (FIIs) reported a net outflow, with buy values at Rs. 16,911.35 crore and sale values at Rs. 17,532.30 crore, resulting in a net negative value of Rs. 620.95 crore.

Domestic Institutional Investors (DIIs) showed a net inflow, with buy values at Rs. 15,699.20 crore and sale values at Rs. 13,577.67 crore, leading to a net positive value of Rs. 2,121.53 crore.

Bank Nifty

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

The Nifty Bank saw no gainers today.

On the other hand, the biggest losers in the sector included State Bank of India with a 4.26% decline, Bandhan Bank with a 3.51% decline, Bank of Baroda with a 3.22% decline, Federal Bank with a 3.15% decline, and Punjab National Bank with a 3.06% decline.

These results imply that almost all banking stocks lagged behind today.

Gold and Silver Rate (INR) 6th September, 2024

Rupee Gains 2 Paise but Faces Resistance from Market Pressures

In a market where every paise counts, the Indian rupee managed a small victory today, closing 2 paise higher against the US dollar at 83.95. However, this gain was a hard-fought battle against several headwinds.

While a weaker greenback in global markets provided some support, the rupee’s gains were capped by negative domestic markets, rising crude oil prices, and the continued outflow of foreign capital. This delicate balancing act saw the rupee trading in a narrow range throughout the day, ultimately settling at 83.95.

Looking ahead, analysts are predicting a slight negative bias for the rupee due to weak global equities and concerns about global economic growth. The non-farm payrolls report and speeches by US Federal Reserve officials will also influence the rupee’s trajectory.

The dollar index, which measures the greenback’s strength against a basket of six currencies, fell slightly today. Brent crude, on the other hand, saw a modest increase.

As the rupee continues to navigate these turbulent waters, investors will be closely watching these key factors to gauge its future direction.

Stocks Highlights

Bajaj Finance Ltd. saw a modest rise, climbing 0.97% from its previous close to Rs 7,314.85. This slight uptick reflects a broader trend: over the past 19 years, only 3.21% of trading sessions have recorded intraday declines exceeding 5%. A company with impressive revenue growth, Bajaj Finance has outpaced its 3-year CAGR of 26.95% with a current annual revenue growth rate of 32.79%. However, its 3-year stock return stands at -3.7%, trailing behind the Nifty 100’s impressive 49.32% return during the same period.

On the expenses front, Bajaj Finance allocated a significant 34.06% of its operating revenue to interest expenses and 11.64% to employee costs in the fiscal year ending March 31, 2024. This balanced approach highlights the company’s focus on managing costs while driving revenue growth.

on the other hand, State Bank of India (SBI), experienced a dip in share price, falling 4.26% to Rs 783.90. Historically, only 1.66% of its trading sessions in the last 19 years saw intraday gains above 5%. Despite this, SBI’s loan book has been growing steadily, with a 15.8% YoY increase, exceeding its 5-year CAGR of 9.77%. The bank also boasts a consistent rise in net profit per employee, with a 23.45% increase last year.

A recent 14-day moving average crossover suggests a potential buy signal for SBI, often leading to a 3.83% average price gain within seven days over the past five years. But with both companies showing mixed signals, is a rally on the horizon, or will volatility continue to reign?

Advance Decline Ratio

Today, the advance-decline ratio was 0.38, and the market breadth was negative. The volatility index India Vix increased by 6.49 to settle at 15.13 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 747
Decliners – 1969
52Wk High – 149
52Wk Low – 25
High Band Hitters – 94
Low Band Hitters – 82
200d SMA – 22633
50d SMA – 24592
20d SMA – 24822

Top Gainers and Losers Stocks

The top gainers were Bajaj Finance (+0.97%), Asian Paint (+0.87%), JSW Steel (+0.60%), LTIM (+0.36%), and Nestle India (+0.20%).

The top losers were SBIN (-4.26%), BPCL (-2.34%), ICICI Bank (-2.14%), NTPC (-2.05%), and HCL Technologies (-2.04%).

Top Gainers and Losers Sectors

The top losers sector were Oil & Gas (-2.16%), Financial Services (-1.38%), Auto (-1.19%), Media (-1.10%), and IT (-0.97%).

SECTORS – NOTABLE ACTION
OIL & GAS -2.16%
FINANCIAL SERVICES -1.38%
AUTO -1.19%

Stocks Ban List

(SEBI) F&O ban list (CHAMBLFERT close at -501.30), (BALRAMCHIN close at -568.05), (BIOCON close at -373.70), (BANDHANBNK close at -196.33), (RBLBANK close at -212.22), (ABFRL close at -309.15), and (HINDCOPPER close at -311.85) 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.

NMDC, IDEA, SAIL, PNB, BANKBARODA, and GNFC stocks has the possibilities of entrance in the ban list.

Daily Pivots

As per the above pivots data, 24600 to 25100 is the Nifty 50 trading range.

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