Nifty Drops as Banks and IT Stocks Face Pressure FII Selling and US Rate Cut Hopes Fade

At the close, the Nifty 50 was at 21,352.60 down by 0.47%

In the dynamic landscape of today’s financial market, the NSE Nifty 50 faced a challenging start, witnessing a 0.47% dip and concluding in negative territory, breaching the crucial 21,400 level. This downturn was primarily driven by selling pressure on banks and IT stocks, attributed to actions by foreign institutional investors (FIIs), compounded by diminishing optimism regarding potential US rate cuts.

Amidst this, the Nifty smallcap index displayed resilience, closing 0.5% higher, while midcap indices underwent necessary corrections. The correction was imperative to address inflated valuations in several mid and small-cap stocks lacking robust fundamental and technical support. Notably, weak results from Tech Mahindra exerted additional downward pressure on information technology stocks, contributing to the overall decline in the Nifty.

Looking forward, market analysts anticipate a phase of sideways consolidation in upcoming sessions, influenced by sustained foreign selling activities. Investors are advised to exercise caution, given the prevalence of profit booking in both large and mid-cap stocks, coupled with the impending expiry of the January derivatives series. This corrective phase is expected to persist in the short term, aligning with the build-up to the vote on account-Budget 2024, providing a crucial adjustment period for market participants.

Bank Nifty: Down by 0.48%

The Bank Nifty commenced its trading day on a bearish note, marking a 0.48% decline and concluding in negative territory at 44,866.15. Concurrently, the BSE Sensex mirrored this trend, registering a 0.51% dip and closing at 70,700.67. Despite the initial downward trajectory, the Bank Nifty showcased resilience, witnessing a noteworthy recovery from intraday lows and ultimately closing marginally negative.

Within the sectorial landscape, the realty sector emerged as a standout performer, experiencing a substantial gain of 0.67%. Swan Energy Ltd. took the lead with an impressive surge of 4.73%, closely followed by Godrej Properties Ltd. with a commendable gain of 2.89%. Conversely, the information technology (IT) sector faced a downturn, marked by a collective decline of 1.60%. Tech Mahindra Ltd. recorded a notable loss of -5.89%, while Coforge Ltd. experienced a downturn with a loss of -2.69%.

Foreign institutional investors (FIIs/FPIs) exhibited a net selling trend, with a buy value of Rs. 34,280.27 Cr. and a higher sale value of Rs. 36,424.33 Cr., resulting in a net value of -2,144.06 Cr. Conversely, domestic institutional investors (DIIs) engaged in robust market participation, posting a positive trend. With a buy value of Rs. 12,353.83 Cr. and a sale value of Rs. 8,878.94 Cr., DIIs achieved a favorable net value of Rs. 3,474.89 Cr.

Bank Nifty

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

The gainers included Punjab National Bank with a 3.52% increase, IndusInd Bank with a 1.17% increase, IDFC First Bank with a 1.13% increase, and ICICI Bank with a 0.98% increase. On the other hand, the biggest losers in the sector included AU Bank with a 3.70% decline, Bandhan Bank with a 1.11% decline, HDFC Bank with a 1.04% decline, Axis Bank with a 0.85% decline, and Kotak Bank with a 0.76% decline. These results suggest that some of the banking stocks not performed better for the day.

Rupee’s Modest Gain Amidst Global Dynamics and Domestic Challenges

In a closely monitored session, the Indian rupee exhibited a marginal uptick of 1 paisa against the US dollar, closing at 83.11 (pro) on Thursday. The currency’s modest gain was influenced by the weakening American dollar on the international front; however, this positive momentum was counteracted by the escalating crude oil prices.

Trading within a narrow range, the rupee faced headwinds from subdued domestic equities and consistent foreign fund outflows, tempering investor confidence. Opening at 83.13, the rupee fluctuated between 83.08 and 83.14 during the day, settling at 83.11 (pro), a marginal increase from its previous close of 83.12.

Amidst weak domestic markets and the persistent challenge of rising crude oil prices, the rupee treaded cautiously. Foreign fund outflows added to the currency’s flat performance. Looking ahead, the rupee is anticipated to maintain a slight negative bias, influenced by geopolitical tensions in the Middle East, the Red Sea issue, and potential selling pressure from foreign investors.

In the global context, the dollar index showed a marginal decline at 103.17, while Brent crude futures surged by 1.32% to $81.10 per barrel, further impacting the delicate balance of the rupee in the coming sessions. Investors are advised to closely monitor these factors for informed decision-making in the dynamic currency market.

Stocks Highlights

Bajaj Auto Ltd. witnessed a robust 5.23% increase in its share price, reaching Rs 7,590.00 from its previous close of Rs 7,212.85. Notably, the company’s innovative new dividend policy, tying payouts to cash reserves, signals a positive outlook. With zero debt for the past five years and prudent financial management, Bajaj Auto appears well-positioned for dividend growth in FY23 and beyond. Operating efficiently, the company allocated less than 1% of its revenues to interest expenses and 4.07% to employee costs in the fiscal year ending March 31, 2023.

On the flip side, Bharti Airtel Ltd. experienced a -2.54% dip in share price, closing at Rs 1,159.75 compared to the previous day’s Rs 1,189.95. Despite this, the company boasts an impressive track record, with only 1.94% of trading sessions in the last 19 years showing intraday gains exceeding 5%. Bharti Airtel’s 3-year revenue compound annual growth rate (CAGR) of 15.94% falls slightly short of its annual revenue growth of 19.64%, showcasing consistent performance. However, investors should take note of the company allocating 13.87% of its operating revenues to interest expenses and 3.47% to employee costs in the fiscal year ending March 31, 2023.

Advance Decline Ratio

Today, the advance-decline ratio was 1.22, and the market breadth was positive. The volatility index India Vix decreased by 3.54 percent to settle at 13.87 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 1358
Decliners – 1117
52Wk High –  158
52Wk Low – 15
High Band Hitters – 147
Low Band Hitters – 44
200d SMA – 19564
50d SMA – 21048
20d SMA – 21632

Top Gainers and Losers Stocks

The top gainers were Bajaj Auto (+5.23%), Adani Ports (+2.71%), NTPC (+1.91%), Coal India (+1.88%), and IndusInd Bank (+1.17%).

The top losers were Tech Mahindra (-5.89%), Cipla (-3.00%), Bharti Airtel (-2.54%), Divi’s Laboratories (-2.43%), and LTIM (-2.18%).

Top Gainers and Losers Sector

The top gainers sector were Realty (+0.67%), Media (+0.19%), Metal (+0.14%), and Auto (+0.11%).

The top losers sector were IT (-1.60%), Pharma (-1.30%), FMCG (-1.15%), Financial Services (-0.53%), and Consumer Durables (-0.51%).

SECTORS – NOTABLE ACTION
REALTY +0.67%
MEDIA +0.19%
METAL +0.14%
IT -1.60%
PHARMA -1.30%
FMCG -1.15%

Stocks Ban List

(SEBI) F&O ban list (ZEEL open at +167.00 and close at -163.20) 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.

IDEA, GMRINFRA, CANBK, BANDHANBNK, INDUSTOWER, PNB, GNFC, TATACHEM, and PVRINOX stocks has the possibilities of entrance in the ban list.

Daily Pivots

As per the above pivots data, 21200 to 21500 is the Nifty 50 trading range.

Read previous -Daily Insights- here
Indian Benchmark Indices Rebound, Erasing Previous Losses in Volatile Trading
Sector-Wide Selling Impacts Indian Equity Market Nifty50 Down 1.5%
Indian Equity Benchmarks Retreat in Saturday’s Volatile Trading

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