Sector-Wide Selling Impacts Indian Equity Market Nifty50 Down 1.5%

At the close, the Nifty 50 was at 21,238.80 down by 1.54%

In a day of oscillating fortunes, the NSE Nifty 50 experienced a rollercoaster ride, initially surging on the back of positive global cues. However, the day concluded with a notable dip of 1.54%, settling below the crucial support level of 21,250. The optimistic start, driven by stellar quarterly performances from Cipla and ICICI Bank, was overshadowed by heightened selling pressure, primarily impacting sectors beyond Pharma.

Despite a promising beginning, the Nifty struggled to maintain momentum, closing approximately 333 points lower. Notably, mid and small-cap segments bore the brunt of the decline, outpacing losses in the main indices.

The downturn can be attributed to significant sell-offs in heavyweight sectors, particularly finance. Foreign Institutional Investors (FIIs) played a role in the market decline, expressing concerns over elevated valuations, mixed earnings, and geopolitical tensions in the Middle East and Red Sea.

Looking forward, market participants should brace for stock-specific movements during the ongoing earnings season. Furthermore, the impending tightening of ultimate beneficial ownership norms by the Securities and Exchange Board of India (SEBI) for overseas investors from February 1 may trigger a substantial sell-off in non-compliant funds over the next six months. Investors are advised to stay vigilant amidst these dynamic market conditions.

Bank Nifty: Down by 2.26%

The Bank Nifty showcased resilience, opening positively and closing on an upward trajectory at 45,015.05, despite a temporary dip of 2.26%. In stark contrast, the BSE Sensex faced a downturn, recording a 1.47% decline and concluding the session in the red at 70,370.55, marking a notable low.

Sectorial dynamics revealed the pharmaceutical sector as a standout performer, witnessing a substantial gain of +1.66%. Cipla Ltd. surged impressively by 6.97%, and Sun Pharmaceutical Industries Ltd. followed suit with a commendable 4.04% increase. On the flip side, the media sector grappled with a significant setback, experiencing a -12.87% decline. Zee Entertainment Enterprises Ltd. took a notable hit, facing a staggering loss of -30.47%, while Network18 Media & Investments Ltd. saw a downturn of -9.99%.

Foreign Institutional Investors (FIIs/FPIs) were active, displaying a buy value of Rs. 26,390.61 Crore and a sale value of Rs. 29,506.00 Crore, resulting in a net value of -Rs. 3,115.39 Crore. On the domestic front, Domestic Institutional Investors (DIIs) engaged with a buy value of Rs. 14,853.87 Crore and a sale value of Rs. 14,639.47 Crore, resulting in a positive net value of Rs. 214.40 Crore. Investors are urged to navigate these sectorial shifts and stay vigilant in the face of market fluctuations.

Bank Nifty

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

The gainers included ICICI Bank with a 1.90% increase. On the other hand, the biggest losers in the sector included IDFC First Bank with a 6.56% decline, IndusInd Bank with a 6.18% decline, Punjab National Bank with a 6.10% decline, AU Bank with a 4.37% decline, and State Bank of India with a 4.02% decline. These results suggest that most of the banking stocks not performed better for the day.

Rupee Faces Pressure Amidst Rising Crude Oil Prices and Foreign Fund Outflows

The Indian rupee experienced a modest depreciation of 6 paise, reaching 83.13 against the US dollar in the morning session. This downward trend can be attributed to heightened crude oil prices and increased demand for the dollar from importers, creating a challenging economic environment.

Despite positive domestic equities, the rupee’s narrow trading range is marked by foreign fund outflows, offsetting the support from the local market. Opening at 83.11 and subsequently slipping to 83.13, the rupee faces pressure, reflecting a 6 paise drop from its previous close. Notably, the currency did touch an early high of 83.09 against the US dollar before facing a decline.

The backdrop of these currency fluctuations includes Brent crude futures trading slightly lower at USD 80.04 per barrel. The surge in Brent oil prices above USD 80 per barrel stems from supply concerns arising from disruptions in the US and Russia. Additionally, caution looms ahead of central bank meetings, contributing to a somewhat muted market sentiment.

In the broader economic context, the dollar index, measuring the greenback’s strength against a basket of six currencies, showed a 0.10% decrease, standing at 103.22. As the currency landscape navigates through these factors, market participants are advised to stay vigilant and adapt to the evolving financial dynamics.

Stocks Highlights

Sun Pharmaceutical Industries Ltd. witnessed a commendable surge in its share price, marking a 4.04% increase from the previous close of Rs 1,326.15. The stock’s last traded price stands at Rs 1,379.75. Notably, the company’s Return on Equity (ROE) outperformed its 5-year average, boasting an impressive 15.13% for the year ending March 31, 2023, compared to the 5-year average of 8.89%. Furthermore, Sun Pharma exhibited robust annual revenue growth of 12.49%, surpassing its 3-year Compound Annual Growth Rate (CAGR) of 9.87%. The company’s prudent financial management is evident, with less than 1% of operating revenues allocated to interest expenses and 18.9% towards employee costs in the same period.

In contrast, Coal India Ltd. faced a downturn, with its share price decreasing by -5.58% from the previous close of Rs 398.80, settling at Rs 376.55. Despite this, the company showcased impressive annual revenue growth of 27.45%, surpassing its 3-year CAGR of 12.19%. However, concerns arise as the company allocated a significant 35.74% of operating revenues towards employee costs in the fiscal year ending March 31, 2023, and kept interest expenses below 1%. Investors are advised to closely monitor these contrasting performances as they navigate the dynamic stock market landscape.

Advance Decline Ratio

Today, the advance-decline ratio was 0.20, and the market breadth was negative. The volatility index India Vix increased by 7.60 percent to settle at 14.85 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 421
Decliners – 2126
52Wk High –  216
52Wk Low – 26
High Band Hitters – 109
Low Band Hitters – 154
200d SMA – 19524
50d SMA – 20970
20d SMA – 21664

Top Gainers and Losers Stocks

The top gainers were Cipla (+6.97%), Sun Pharmaceutical (+4.04%), Bharti Airtel (+2.97%), ICICI Bank (+1.90%), and Dr. Reddy (+0.83%).

The top losers were IndusInd Bank (-6.18%), Coal India (-5.58%), SBI Life (-4.66%), ONGC (-4.57%), and Adani Ports (-4.27%).

Top Gainers and Losers Sector

The top gainers sector were Pharma (+1.66%).

The top losers sector were Media (-12.87%), Realty (-5.31%), Oil & Gas (-3.47%), Metal (-3.43%), and Financial Services (-1.97%).

SECTORS – NOTABLE ACTION
PHARMA +1.66%
MEDIA -12.87%
REALTY -5.31%
OIL & GAS -3.47%

Stocks Ban List

(SEBI) F&O ban list (OFSS open at -6690.00 and close at -6489.50), (IRCTC open at +1045.05 and close at -935.35), (NATIONALUM open at +136.50 and close at -126.75), (RBLBANK open at +272.00 and close at -253.35), (BALRAMCHIN open at -384.40 and close at -378.60), (SAIL open at -114.90 and close at -108.80), (ZEEL open at -208.30 and close at -155.95), (POLYCAB open at -4350.00 and close at -4169.95), (DELTACORP open at +146.00 and close at -140.10), (IEX open at +143.30 and close at -136.45), and (ABFRL open at +226.90 and close at -222.70) 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.

GNFC, GMRINFRA, INDUSTOWER, PNB, SUNTV, IDEA, BANDHANBNK, BHEL, NMDC, PEL, INDIACEM, PVRINOX, ASHOKLEY, and UPL stocks has the possibilities of entrance in the ban list.

POLYCAB, DELTACORP, IEX, and ABFRL stocks has the possibilities of exit from the ban list.

Daily Pivots

As per the above pivots data, 20950 to 21650 is the Nifty 50 trading range.

Read previous -Daily Insights- here
Indian Equity Benchmarks Retreat in Saturday’s Volatile Trading
Nifty Gaps Up on Strong Global Cues, Ends Range-Bound
NSE Nifty 50 Extends Fall, Hits Below 21,500

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