Nifty Plunges Following RBI’s Rate Announcement

At the close, the Nifty 50 was at 21,717.95 down by 0.97%

The National Stock Exchange’s Nifty 50 began positively but closed in the red, dropping by 0.97% below the crucial 21,750 mark. This shift in sentiment follows the Reserve Bank of India’s (RBI) decision to maintain the repo rate for the sixth consecutive meeting. Investors, anticipating a rate cut, reacted with disappointment, particularly impacting banking stocks.

RBI’s Repo Rate Standoff: Thursday’s market saw a significant downturn as the RBI opted to keep the repo rate unchanged, offering no clarity on future rate cuts. Private bank stocks bore the brunt of this decision, experiencing heightened selling pressure across the board.

Concerns Over Inflation and Liquidity: Despite an optimistic GDP growth forecast for 2024-2025, concerns linger regarding inflation and banking liquidity. The RBI’s caution stems from incomplete transmission of prior rate cuts and inflation levels surpassing the target range.

Investor Unease Deepens: The lack of clarity on inflation and rate adjustments intensified investor apprehension, leading to heightened selling after the RBI’s announcement. Liquidity issues within the banking sector compounded the situation, with no immediate relief on interest rates in sight.

The market downturn reflects investor apprehension following the RBI’s decision to maintain the repo rate amidst inflation concerns and liquidity challenges, particularly impacting private bank stocks.

Bank Nifty: Down by 1.76%

At the opening bell, the Bank Nifty showed promise with a green start, but later succumbed to selling pressure, ending the trading session with a notable decline of 1.76%. The index closed in the red, settling at 45,012.00, indicative of market turbulence and investor uncertainty. Similarly, the BSE Sensex experienced a challenging day, recording a decline of 1.00%. The Sensex closed in the red zone, reaching a low of 71,428.43 by the end of the trading day.

In the sectorial front, the media sector exhibits notable growth, surging by 1.99% in recent trading sessions. Leading this upward trend is Zee Entertainment Enterprises Ltd., boasting an impressive gain of 6.77%. Following closely behind is Dish TV India Ltd., marking a substantial increase of 4.56%. Conversely, the FMCG sector experiences a downturn, witnessing a decline of 2.06%. Among the notable losers within this sector are Britannia Industries Ltd., with a decrease of -3.16%, and Nestle India Ltd., posting a loss of -2.98%.

Foreign Institutional Investors (FII/FPI) exhibited a net selling behavior, with a sale value of Rs. 21,182.49 crore outweighing their buy value of Rs. 16,248.71 crore. Consequently, the net value for FII/FPI activity stood at a deficit of Rs. -4,933.78 crore. Conversely, Domestic Institutional Investors (DII) emerged as net buyers in the market, with a buy value of Rs. 17,291.78 crore surpassing their sale value of Rs. 11,779.46 crore. This resulted in a positive net value of Rs. 5,512.32 crore for DII activity.

Bank Nifty

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

The gainers included State Bank of India with a 3.64% increase, Bank of Baroda with a 3.62% increase, Punjab National Bank with a 0.40% increase. On the other hand, the biggest losers in the sector included Kotak Bank with a 3.49% decline, AU Bank with a 3.46% decline, Axis Bank with a 3.01% decline, ICICI Bank with a 2.96% decline, and IDFC First Bank with a 2.59% decline. These results suggest that some of the banking stocks not performed better for the day.

Rupee Holds Steady Against US Dollar Amid RBI’s Monetary Policy Decision

On Thursday, the Indian rupee exhibited a stable performance, settling at 82.96 (pro) against the US dollar. This came in the wake of the Reserve Bank of India’s decision to maintain the key policy rate unchanged for the sixth consecutive time, emphasizing its commitment to curbing inflationary pressures. However, a negative sentiment prevailed in the domestic equity market, impacting investor confidence.

At the interbank foreign exchange, the rupee commenced trading at 82.94 against the dollar, maintaining a narrow trading range throughout the day before concluding at 82.96 against the American currency. The central bank’s decision to retain the repo rate at 6.5% for the sixth time influenced the currency’s movement. Throughout the trading session, the rupee oscillated between an intraday high of 82.89 and a low of 83 against the US dollar. Notably, the rupee had appreciated by 9 paise against the dollar in the preceding session, closing at 82.96.

The Indian rupee’s stability can be attributed to the RBI’s consistent approach in monetary policy, aligning with market expectations. Despite external volatility and domestic challenges, the currency remains resilient, reflecting confidence in the central bank’s measures to uphold economic stability.

Stocks Highlights

State Bank of India (SBI) share price surged by an impressive 3.64%, reaching Rs 699.80 from its previous close of Rs 675.25. Notably, only 1.67% of trading sessions in the last 19 years witnessed intraday gains exceeding 5%. SBI’s loan book growth remains robust, surpassing its 5-year CAGR with a YoY increase of 16.96% in advances. Furthermore, the bank’s net profit per employee demonstrates an uptrend, boasting a remarkable growth of 64.22% over the last year. Additionally, SBI has successfully reduced its gross NPA% and net NPA% over the past four years to 2.78% and 0.67%, respectively, indicating improved asset quality.

Contrary to SBI’s positive momentum, Kotak Mahindra Bank Ltd. witnessed a decline of -3.49% in its share price, closing at Rs 1,730.00 from the previous close of Rs 1,792.60. In the last 19 years, only 2.39% of trading sessions saw intraday gains surpassing 5%. Despite reporting a YoY increase of 17.94% in advances, outpacing its 5-year CAGR, Kotak Mahindra Bank faces a sell signal with a daily MACD crossover. Historical data indicates an average price decline of -2.59% within 10 days following this signal over the past decade.

Advance Decline Ratio

Today, the advance-decline ratio was 0.64, and the market breadth was negative. The volatility index India Vix increased by 2.07 percent to settle at 15.83 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 991
Decliners – 1544
52Wk High –  262
52Wk Low – 18
High Band Hitters – 113
Low Band Hitters – 80
200d SMA – 19747
50d SMA – 21407
20d SMA – 21692

Top Gainers and Losers Stocks

The top gainers were SBIN (+3.64%), BPCL (+3.35%), Power Grid (+3.00%), Coal India (+1.84%), and Hindalco (+1.73%).

The top losers were Kotak Bank (-3.49%), Britannia (-3.16%), Axis Bank (-3.01%), Nestle India (-2.98%), and Eicher Motors (-2.97%).

Top Gainers and Losers Sector

The top gainers sector were Media (+1.99%), Oil & Gas (+0.93%), IT (+0.22%).

The top losers sector were FMCG (-2.06%), Financial Services (-1.85%), Auto (-1.28%), Realty (-0.69%), and Metal (-0.66%).

SECTORS – NOTABLE ACTION
MEDIA +1.99%
OIL & GAS +0.93%
IT +0.22%
FMCG -2.06%
FINANCIAL SERVICES -1.85%
AUTO -1.28%

Stocks Ban List

(SEBI) F&O ban list (INDUSTOWER open at +226.80 and close at +227.60), (DELTACORP open at +152.35 and close at -144.85), (SAIL open at -144.25 and close at -139.05), (BALRAMCHIN open at +403.45 and close at -391.75), (INDIACEM open at -242.00 and close at -237.35), (ASHOKLEY open at -178.50 and close at -176.00), (HINDCOPPER open at -297.00 and close at -289.55), (UPL open at -480.00 and close at -464.85), (NATIONALUM open at -162.55 and close at -160.90), and (ZEEL open at +185.00 and close at +193.30) 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.

PNB, BIOCON, TATACHEM, AUROPHARMA, RBLBANK, PEL, CANBK, ABFRL, GMRINFRA, BANDHANBNK, and PVRINOX stocks has the possibilities of entrance in the ban list.

NATIONALUM, and ZEEL stock has the possibilities of exit from the ban list.

Daily Pivots

As per the above pivots data, 21550 to 21950 is the Nifty 50 trading range.

Read previous -Daily Insights- here
RBI MPC’s Cues Awaited as Nifty Loses Early Gains on Profit Booking
Indian Equity Benchmarks Finish Strong Despite Fed Rate Cut Delay
Nifty Dips Below 21,800, Market Fails to Sustain Gains

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