SEBI’s Denial and Nifty’s Decline—What’s Really Behind the Drama?

At the close, the Nifty 50 was at 24,347.00 down by 0.08%

The NSE Nifty 50 began the day with a tremor, slipping 0.08% and closing at 24,347.00. Despite the turbulence, the index hovered precariously above 24,300, a testament to the market’s stormy temperament stirred by recent allegations against the Securities and Exchange Board of India (SEBI).

The day’s descent kicked off with a jolt from US-based Hindenburg Research. Their report cast shadows over SEBI Chairperson Madhabi Puri Buch and her husband Dhaval Buch, suggesting dubious connections to offshore funds tied to the Adani Group. While both SEBI and the Buchs have vigorously denied these claims, the allegations sent ripples through the market, igniting wild fluctuations.

After an uncertain beginning, the Nifty briefly rallied, pushing above 24,400, only to be dragged down in a frenzied last-hour sell-off. The day’s trading was a chaotic dance, with the index struggling to reclaim lost ground before settling near its lower limits.

Adding to the day’s drama, the Hindenburg report had already caused a rout in Adani Group stocks. Global positive cues offered little solace, overshadowed by ongoing concerns like rising oil prices and inflation. Technical indicators like the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) hinted at a bearish undertone, suggesting that the turbulence might persist.

Despite the gloom, there’s a glimmer of hope for recovery, driven by expectations of easing CPI inflation and a favorable monsoon. Yet, with the Nifty teetering below the 21-day EMA and RSI showing weakness, market sentiment remains wary. As the index struggles to breach 24,500, the prevailing mood seems to be “sell on rise” until clearer trends emerge.

Will the Nifty 50 find its footing and weather the storm, or will the lingering uncertainties continue to sway its path?

Bank Nifty: Up by 0.19%

The Bank Nifty showed resilience, starting the day in the red but managing a positive close. The index, which opened lower, ended up by 0.19%, closing at 50,577.95. This uptick highlights the sector’s ability to rebound amidst a day of mixed signals in the broader market.

The BSE Sensex struggled throughout the session. The index initially dipped by 0.07% and ended the day in the red at 79,648.92.

In the sectorial front, the realty sector has emerged as a clear winner, recording a notable gain of 1.32%. Within this sector, Macrotech Developers Ltd. led the charge with an impressive rise of 4.39%, while Mahindra Lifespace Developers Ltd. followed closely, advancing by 3.60%.

Conversely, the media sector faced a challenging day, becoming the top loser with a sharp decline of 2.05%. Notably, Sun TV Network Ltd. saw a steep drop of 10.62%, dragging down the sector. Network18 Media & Investments Ltd. also struggled, with its shares slipping by 3.02%.

FIIs/FPIs had a buy value of Rs. 13,846.14 crore but were net sellers with a sale value of Rs. 18,526.65 crore, resulting in a net outflow of Rs. 4,680.51 crore.

Conversely, DIIs showed a net buying trend. With a buy value of Rs. 13,701.95 crore and a sale value of Rs. 9,224.22 crore, DIIs achieved a net inflow of Rs. 4,477.73 crore.

Bank Nifty

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

The gainers included Axis Bank with a 1.80% increase, Federal Bank with a 1.74% increase, ICICI Bank with a 0.94% increase, HDFC Bank with a 0.59% increase, and Kotak Bank with a 0.30% increase.

On the other hand, the biggest losers in the sector included AU Bank with a 2.63% decline, State Bank of India with a 1.37% decline, IDFC First Bank with a 1.32% decline, Bandhan Bank with a 1.18% decline, and Punjab National Bank with a 0.45% decline. These results suggest that some of the banking stocks performed better for the day.

Gold and Silver Rate (INR) 12th August, 2024

Rupee Under Pressure: A Tightrope Walk for the Indian Currency

The Indian rupee is facing turbulent times, hitting a fresh record low on Monday. While the broader Asian currency market experienced a downturn, the Reserve Bank of India (RBI) is believed to have stepped in to cushion the rupee’s fall.

Despite the central bank’s intervention, the rupee closed at a precarious 83.9725 against the US dollar, marking a decline from the previous session’s 83.9550. The currency traded within a narrow range throughout the day, indicating a battle between market forces and regulatory control.

The RBI’s dollar-selling strategy aimed to prevent a more significant rupee depreciation as most Asian currencies slipped between 0.1% and 0.8%. Simultaneously, the US dollar index softened to 103.1.

Market players anticipate a range-bound rupee in the near term, with all eyes on the upcoming US consumer inflation data on Wednesday. This crucial economic indicator will influence expectations about the Federal Reserve’s monetary policy trajectory. Currently, the market is pricing in around 100 basis points of interest rate cuts in 2024, commencing in September.

However, the lingering strength of the US economy and the approaching November elections cast a shadow over these rate cut projections. This uncertainty could lead to further adjustments in rate cut expectations.

Reflecting these market dynamics, dollar-rupee forward premiums have declined, with the one-year implied yield dropping by 2 basis points to 2.02%.

The question on everyone’s mind is: Can the rupee withstand these pressures, or will it continue its downward spiral?

Stocks Highlights

In a day of mixed fortunes for investors, Oil and Natural Gas Corporation Ltd. (ONGC) saw its share price climb by 2.59%, moving from its previous close of Rs. 332.55 to a last traded price of Rs. 341.15. This upward movement comes as the company announced a dividend of Rs. 2.5 per share, with a record date set for August 23, 2024. Additionally, ONGC has delivered a robust Return on Equity (ROE) of 14.6% for the fiscal year ending March 31, 2024, outperforming its five-year average of 12.06%.

Over the past three years, ONGC has provided a remarkable return of 184.23%, significantly outpacing the Nifty 100’s return of 54.19%. The company’s prudent financial management is evident, with only 1.59% of operating revenues allocated to interest expenses and 1.14% towards employee costs.

On the flip side, Dr. Reddy’s Laboratories Ltd. experienced a 1.76% decline in its share price, dropping from Rs. 7,013.50 to Rs. 6,890.00. Despite this dip, the company has showcased strong fundamentals, delivering an impressive ROE of 19.74% for the year ending March 31, 2024, surpassing its five-year average of 15.62%.

Interestingly, a weekly stochastic crossover, which appeared on the week ending August 9, 2024, has historically signaled a bullish trend for Dr. Reddy’s, with an average price gain of 6.23% within seven weeks of this signal over the last decade. However, the stock has only returned 47.81% over the past three years, underperforming compared to the Nifty 100’s 54.19% return. The company’s financial discipline is highlighted by its low interest expenses, which are less than 1% of operating revenues, though employee costs stand at a higher 17.96%.

Advance Decline Ratio

Today, the advance-decline ratio was 0.91, and the market breadth was negative. The volatility index India Vix increased by 3.47 to settle at 15.87 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 1291
Decliners – 1426
52Wk High – 140
52Wk Low – 28
High Band Hitters – 139
Low Band Hitters – 90
200d SMA – 22131
50d SMA – 24005
20d SMA – 24536

Top Gainers and Losers Stocks

The top gainers were ONGC (+2.59%), Hero MotoCorp (+2.15%), Axis Bank (+1.80%), JSW Steel (+1.53%), and Divi’s Laboratories (+1.46%).

The top losers were Adani Ports (-2.33%), NTPC (-2.16%), Dr. Reddy (-1.76%), Britannia (-1.59%), and Adani Enterprises (-1.46%).

Top Gainers and Losers Sectors

The top gainers sector were Realty (+1.32%), Consumer Durables (+0.87%), Metal (+0.75%), Oil & Gas (+0.54%), and Financial Services (+0.20%).

The top losers sector were Media (-2.05%), FMCG (-0.79%), Auto (-0.27%), and Pharma (-0.02%).

SECTORS – NOTABLE ACTION
REALTY +1.32%
CONSUMER DURABLES +0.87%
METAL +0.75%
MEDIA -2.05%
FMCG -0.79%
AUTO -0.27%

Stocks Ban List

(SEBI) F&O ban list (INDIACEM close at +367.25), (SAIL open at close at +131.70), (BIOCON close at +337.85), (GRANULES close at +689.10), (LICHSGFIN close at +646.65), (BANDHANBNK close at -197.05), (MANAPPURAM close at +209.92), (ABFRL close at -321.80), (INDIAMART close at -2757.30), (PNB close at -114.60), (RBLBANK close at +216.18), (BSOFT close at +587.30), (HINDCOPPER close at -302.75), (ABCAPITAL close at +212.59), and (GNFC close at +669.70) 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.

EXIDEIND, IEX, IDFCFIRSTB, PEL, CONCOR, and SBICARD stocks has the possibilities of entrance in the ban list.

ABCAPITAL, and GNFC stocks has the possibilities of exit from the ban list.

Daily Pivots

As per the above pivots data, 24150 to 24500 is the Nifty 50 trading range.

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