Nifty’s Mysterious Plunge: Could the US Payroll Reveal Hidden Secrets?

At the close, the Nifty 50 was at 24,717.70 down by 1.17%

On August 2, the NSE Nifty 50 index began the day in the red, reflecting a 1.17% drop, but managed to close in the green, ending at 24,717.70—down by 293.20 points. This marked a reversal from its five-day winning streak as global equity losses and sector-wide sell-offs weighed heavily. Indian markets mirrored global trends, driven by concerns over the US economy and tech sector outlook.

The day witnessed a broad-based sell-off across all 13 major sectors, following a global equity sell-off triggered by disappointing US economic data. The Nifty’s decline erased previous weekly gains, highlighting a market correction amid weak global cues and poor earnings reports. The index opened with a gap down and exhibited weak price action, closing below the levels of the last four trading sessions. This indicated a failure to sustain recent upward momentum, leading to profit-taking and a correction.

Globally, equities took a hit after US unemployment claims surged to a near one-year high and manufacturing data disappointed. The Nasdaq 100 futures dropped 1.6% amid poor results from Amazon and Intel. Japan’s benchmark index faced its sharpest drop since 2016 due to a stronger yen affecting its export-driven economy. Europe’s Stoxx 600 index fell by 1.5%.

In response to these developments, investors are keenly awaiting July’s US employment report to gauge labor market health and adjust expectations for the Federal Reserve’s rate decisions. Despite the Fed’s recent rate pause and the Bank of England’s 25 bps cut, global markets are consolidating. The US IT sector’s weak earnings, potential rise in unemployment, and concerns about further rate hikes by the BOJ are dampening sentiment.

As domestic markets saw FPI outflows and a broad-based sell-off, will the Nifty 50 manage to stabilize, or are further corrections on the horizon?

Bank Nifty: Down by 0.41%

The Bank Nifty index and the BSE Sensex both experienced notable declines. The Bank Nifty opened lower, down by 0.41%, and ended the day in the red, closing at 51,350.15. Similarly, the BSE Sensex fell by 1.08%, settling at 80,981.95, marking a significant drop.

In the sectorial front, Pharma stocks experienced a notable rise, gaining 0.52%. Leading the charge, Granules India Ltd. surged by an impressive 2.14%, followed closely by Divi’s Laboratories Ltd., which saw a 1.74% increase.

On the flip side, the real estate sector faced a significant downturn, making it the day’s top loser with a 3.53% decline. Within this sector, Brigade Enterprises Ltd. experienced a sharp drop of 4.80%, while The Phoenix Mills Ltd. wasn’t far behind, losing 4.38%.

FIIs/FPIs recorded a net outflow of Rs. 3,310.00 crore, with buy transactions amounting to Rs. 14,184.90 crore and sales totaling Rs. 17,494.90 crore.

In contrast, DIIs demonstrated a net inflow of Rs. 2,965.94 crore. They bought stocks worth Rs. 16,579.92 crore while selling Rs. 13,613.98 crore.

Bank Nifty

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

The gainers included HDFC Bank with a 1.17% increase, and Kotak Bank with a 0.27% increase.

On the other hand, the biggest losers in the sector included Bank of Baroda with a 3.00% decline, Punjab National Bank with a 2.07% decline, State Bank of India with a 1.73% decline, Federal Bank with a 1.52% decline, and IDFC First Bank with a 1.37% decline. These results suggest that most of the banking stocks not performed better for the day.

Gold and Silver Rate (INR) 02nd August, 2024

Rupee Holds Steady Amidst Global Market Volatility

The Indian rupee concluded a lackluster trading session on Friday, settling at 83.75 against the US dollar, a marginal decline of 2 paise from the previous close. While a weakening dollar due to subdued US manufacturing data offered some respite, the overall market sentiment was dampened by widespread sell-offs in both domestic and global equities.

Despite the downward pressure, the rupee managed to resist a sharper fall thanks to sustained foreign capital inflows. The currency traded within a narrow range of 83.72 to 83.76 throughout the day.

Market experts believe that the rupee’s trajectory will be influenced by the upcoming US non-farm payroll data. A weaker-than-expected report could further weaken the dollar and provide support to the rupee. Additionally, any intervention by the Reserve Bank of India (RBI) to stabilize the currency could also play a crucial role.

The dollar index retreated by 0.27% to 103.92, reflecting a decline in the greenback’s strength. Meanwhile, global oil prices edged upwards, with Brent crude rising 0.28% to $79.74 per barrel.

Investors will be closely monitoring these developments to gauge the rupee’s future direction.

Will the rupee be able to withstand further pressure from global uncertainties?

Stocks Highlights

Divi’s Laboratories Ltd. saw its share price increase by 1.74%, moving from a previous close of Rs 4,917.90 to a new price of Rs 4,973.05. Investors have more to celebrate with the company’s recent dividend announcement of Rs 30.0 per share, set for August 2, 2024.

However, when compared to the Nifty 100, Divi’s Laboratories delivered a modest 0.24% return over three years, a stark contrast to the Nifty 100’s 61.48%.

On the other hand, Eicher Motors Ltd. experienced a sharp decline, with its share price dropping by 5.15%, from Rs 4,968.80 to Rs 4,713.00. Despite this, Eicher announced a generous dividend of Rs 51.0 per share, payable on August 7, 2024.

Impressively, Eicher Motors has delivered a remarkable 96.38% return over three years, significantly outperforming the Nifty 100. Additionally, the company reported a robust ROE of 22.17% for the year ending March 31, 2024, surpassing its five-year average of 17.54%.

Advance Decline Ratio

Today, the advance-decline ratio was 0.58, and the market breadth was negative. The volatility index India Vix increased by 11.40 to settle at 14.41 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 973
Decliners – 1685
52Wk High – 152
52Wk Low – 32
High Band Hitters – 108
Low Band Hitters – 81
200d SMA – 21998
50d SMA – 23840
20d SMA – 24588

Top Gainers and Losers Stocks

The top gainers were Divi’s Laboratories (+1.74%), HDFC Bank (+1.17%), Dr. Reddy (+0.84%), Sun Pharmaceuticals (+0.80%), and Britannia (+0.63%).

The top losers were Eicher Motors (-5.15%), Tata Motors (-4.32%), Maruti (-4.06%), JSW Steel (-3.91%), and Hindalco (-3.89%).

Top Gainers and Losers Sectors

The top gainers sector were Pharma (+0.52%).

The top losers sector were Realty (-3.53%), Auto (-2.92%), Metal (-2.70%), IT (-2.41%), and Oil & Gas (-1.24%).

SECTORS – NOTABLE ACTION
PHARMA +0.52%
REALTY -3.53%
AUTO -2.92%
METAL -2.70%

Stocks Ban List

(SEBI) F&O ban list (INDIACEM open at -360.10 and close at +372.05), (INDIAMART open at -2807.00 and close at -2788.75), (BSOFT open at -630.40 and close at -605.35), (GNFC open at -691.25 and close at -679.45), (GRANULES open at -626.25 and close at +646.10), and (RBLBANK open at -227.00 and close at -226.90) 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.

ABCAPITAL, MANAPPURAM, EXIDEIND, HINDCOPPER, BANDHANBNK, and CHAMBLFERT stocks has the possibilities of entrance in the ban list.

Daily Pivots

As per the above pivots data, 24550 to 24900 is the Nifty 50 trading range.

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