Nifty50 Drops Sharply: Is the Market Heading for a Major Correction? What’s Driving the Sharp Decline?

NiftyTrader • November 28, 2024

Post Views: 468

Index	Price	Change	% Chg
Nifty 50	23,914.15	-360.75	-1.49%
Nifty MidCap 50	15,661.85	–68.55	-0.44%
Nifty SmallCap 50	8,900.15	–11.30	-0.13%
Nifty Bank	51,906.85	-394.95	-0.76%
Nifty Financial	23,919.60	-251.95	-1.04%
BSE SENSEX	79,043.74	–1190.34	–1.48%

At the close, the Nifty 50 was at 23,914.15 down by 1.49%

Nifty Falls Below 24,000 Amidst Global Woes – What’s Next for Investors?

The stock market today witnessed a stormy plunge, as the NSE Nifty 50 took a dramatic dive, ending down by 1.49% at 23,914.15. The crucial 24,000 mark was breached, and the index closed on a disheartening note, signaling fears of further downtrends. Could this be the beginning of a more significant market meltdown?

The ominous signals began early today, as Nifty opened in red and formed a long, dark bearish candlestick pattern on the daily chart. This pattern suggests a downside breakout from the tight range of the past few sessions. The upside gap formed on November 25th has been completely filled, and Nifty settled just above the gap support at 23,900.

Where Are the Key Support Levels?

Despite today’s losses, the Nifty has immediate support at 23,800, and the next level to watch is 23,560, which aligns with the critical 200-Days Exponential Moving Average (DEMA). If these levels fail to hold, the market could spiral further down, possibly testing the 23,600 level.

But don’t expect an easy ride – the resistance at 24,350-24,360 remains formidable, and as long as the index stays below this level, we may only see bounces for profit-booking, not a solid recovery.

Why Did the Market Take a Nosedive Today?

It wasn’t just domestic factors weighing down the market. Global cues were far from optimistic. US inflation data and Fed rate concerns have rattled investors, particularly those in Indian IT stocks, which were some of the worst hit today. The IT sector plunged 2.11%, following a sharp decline in US tech stocks like Nvidia, Meta, and HP. This market weakness, fueled by fears of a slower pace of rate cuts in the US, sent shockwaves through the global economy, leading to weakness in Asian markets as well.

Will the Nifty Recover or Continue the Fall?

Despite the steep drop, the market’s breadth remained positive, with more shares advancing than declining. However, the volatility is palpable. The India VIX surged by 3.96%, indicating growing uncertainty. If Nifty fails to maintain support at 23,870, a further decline toward 23,500 could be imminent. On the flip side, if it holds above this crucial level, a recovery toward 24,200 might be in the cards.

Is the Bear Market Here to Stay?

It’s clear that the Nifty is under pressure, and some experts predict that Nifty could fall towards 23,600 in the near term. The expiry day volatility has heightened fears, and while there is hope for a higher bottom formation, market sentiment remains fragile. If Nifty breaches 23,870, it might trigger a further downward spiral, leaving traders on edge.

In a nutshell, the market is at a crossroads. Will the support levels hold, or are we staring down the barrel of a prolonged bear phase?

Stay tuned, as the coming days will likely determine whether the Nifty’s downfall is a mere correction or the beginning of something more ominous. Are you ready for the rollercoaster ahead?

Bank Nifty: Down by 0.76%

The Indian stock market was hit hard today, as both the Bank Nifty and BSE Sensex opened in the red, signaling a day of heavy losses. The Bank Nifty tumbled by 0.76%, closing at 51,906.85, while the Sensex took a more brutal hit, plunging by a staggering 1.48% to close at 79,043.74. But what caused this dramatic fall?

The Sensex started the day with slight optimism but quickly lost ground, falling by 1,190 points during the session. The index traded within a range of 80,447.40 to 78,918.92, with the downward trajectory evident for most of the day.

In the sectorial front, Media stocks have emerged as the surprising leaders, with the sector seeing a boost of 0.32%. Notably, Nazara Technologies Ltd. led the charge with an impressive 3.44% gain, while Hathway Cable & Datacom Ltd. followed closely with a solid 2.53% increase.

On the flip side, the IT sector has been struggling, with a noticeable decline of 2.39%. This sector has witnessed some significant losses, with L&T Technology Services Ltd. dropping by 3.48%, while Infosys Ltd. faced a 3.34% dip in its stock price.

The Foreign Institutional Investors were heavy sellers today, with a net sale value of Rs. 11,756.25 crore. The total buy value stood at Rs. 10,796.17 crore, while the sale value amounted to Rs. 22,552.42 crore.

Domestic Institutional Investors (DII) displayed a much more bullish outlook. Their buy value was Rs. 17,685.35 crore, and sale value was Rs. 8,967.05 crore, leading to a net buy value of Rs. 8,718.30 crore.

Bank Nifty

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

The gainers included Punjab National Bank with a 2.51% increase, Canara Bank with a 1.75% increase, Bank of Baroda with a 1.50% increase, State Bank of India with a 0.77% increase, and IDFC First Bank with a 0.31% increase.

On the other hand, the biggest losers in the sector included Axis Bank with a 1.27% decline, Kotak Bank with a 1.09% decline, HDFC Bank with a 1.06% decline, ICICI Bank with a 1.01% decline, and IndusInd Bank with a 0.82% decline. These results suggest that most of the banking stocks not performed better for the day.

Gold and Silver Rate (INR) 28th November, 2024

22 K Gold / g	₹ 7,093	– ₹ 12
24 K Gold / g	₹ 7,735	– ₹ 16
18 K Gold / g	₹ 5,801	– ₹ 12

Silver / g	₹ 89.50
Silver / kg	₹ 89,500

Is the Rupee Stabilizing? A Closer Look at the Tension Between Dollar Bids and RBI Intervention

The Indian rupee showed little movement on Thursday, hovering at 84.4625 against the US dollar, just slightly higher than its previous close of 84.4525. Despite dollar bids from foreign banks and importers, which put pressure on the rupee, it was likely intervention from the Reserve Bank of India (RBI) that helped keep the currency from slipping further.

Will the RBI Continue to Support the Rupee?

State-run banks were observed selling US dollars in the early hours of trading, a move widely attributed to the RBI. The central bank has been consistently intervening in recent sessions to support the rupee near the psychologically critical level of 84.50. The rupee had hit a record low of 84.5075 last week, adding to concerns about its stability.

As dollar demand from importers weighed heavily on the rupee, traders speculated that the RBI’s actions were aimed at curbing volatility and keeping the currency in check. Despite some weakness in other Asian currencies, the rupee managed to hold steady, aided by the RBI’s timely intervention.

Global Factors at Play: A Mixed Bag for Asian Currencies

Meanwhile, other Asian currencies were mixed in their performance, with the dollar index trimming losses after dropping 0.7% on Wednesday. Profit-taking led to a decline in the US dollar and US bond yields, a factor that analysts suggest could create further market volatility.

DBS Bank noted, “Profit-taking sent the USD and US bond yields lower,” ahead of the US Thanksgiving holiday, but with heightened uncertainty surrounding US politics, particularly President-elect Trump’s comments about imposing tariffs on countries like China, Canada, and Mexico. This unpredictability leaves global markets wary, and analysts caution that the situation remains volatile.

What’s Next for the Rupee?

With US bond yields declining, dollar-rupee far forward premiums rose, reflecting a slight increase in market expectations for interest rate movements. The 1-year implied yield jumped to 2.23%, its highest level in three weeks.

As investors now look to the upcoming RBI policy meeting, expectations are that rates will remain unchanged, while a near 70% probability of a US rate cut in December adds another layer of complexity to the rupee’s outlook.

Will RBI’s Strategy Be Enough to Keep the Rupee Stable? With global pressures mounting, and potential for further interventions, the next few days could hold crucial insights into how the rupee will fare against the US dollar.

Stocks Highlights

Adani Enterprises Ltd. saw a positive movement today, with its share price rising by 1.63% from its previous close of Rs 2,397.80, to settle at Rs 2,437.00. But there’s more to this than meets the eye. While the stock saw an intraday gain, the company has faced significant topline contraction, with sales dipping 28.87%, marking the first revenue contraction in the last three years. Despite this, the stock has generated an average gain of 4.73% in the seven days following a five-day moving average crossover, suggesting a bullish trend may be on the horizon.

Adani Enterprises: Key Insights

Intraday Fact Check: Only 4.67% of trading sessions in the last 20 years saw gains higher than 5%.
Buy Signal: The five-day moving average crossover from yesterday suggests a bullish trend might be in the offing, historically followed by an average 4.73% gain over the next week.
Stock Returns vs Nifty 100: Over the past three years, Adani Enterprises delivered a return of 43.62%, closely trailing the Nifty 100’s return of 44.07%.

On the other hand, SBI Life Insurance has faced a significant setback, with its share price dropping by -5.41% to Rs 1,424.00, down from its previous close of Rs 1,505.40. Despite the sharp fall today, SBI Life has seen impressive growth over the past few years, with revenue growth of 62.23%, far outpacing its three-year CAGR of 17.13%.

SBI Life Insurance: Key Insights

Intraday Fact Check: In the last 7 years, only 0.67% of trading sessions saw declines larger than 5%.
Contingent Liabilities: The company has sufficient cash reserves to meet its contingent liabilities, providing some reassurance amidst the drop in share price.
Stock Returns vs Nifty 100: SBI Life delivered a three-year return of 33.18%, which is a bit behind the Nifty 100‘s return of 44.07%.

Advance Decline Ratio

Today, the advance-decline ratio was 1.14 and the market breadth was positive. The volatility index India Vix increased by 3.96 to settle at 15.21 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 1477
Decliners – 1294
52Wk High – 61
52Wk Low – 18
High Band Hitters – 118
Low Band Hitters – 41
200d SMA – 23636
50d SMA – 24692
20d SMA – 23992

Top Gainers and Losers Stocks

The top gainers were Adani Enterprises (+1.63%), SBIN (+0.77%), Shriram Finance (+0.63%), and Cipla (+0.47%).

The top losers were SBI Life (-5.41%), HDFC Life (-3.74%), M&M (-3.35%), Infosys (-3.34%), and Adani Ports (-2.53%).

Top Gainers and Losers Sectors

The top gainer sectors were Media (+0.32%), and Realty (+0.04%).

The top losers sectors were IT (-2.39%), Auto (-1.63%), Consumer Durables (-1.14%), Financial Services (-1.04%), and FMCG (-0.56%).

SECTORS – NOTABLE ACTION
MEDIA +0.32%
REALTY +0.04%
IT -2.39%
AUTO -1.63%
CONSUMER DURABLES -1.14%

Stocks Ban List

No stocks are included in SEBI’s F&O ban list today.

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.

PEL, ADANIENT, BANDHANBNK, SAIL, HINDCOPPER, MANAPPURAM, LTF, GRANULES, ABFRL, and RBLBANK stocks has the possibilities of entrance in the ban list.