Selling Pressure Weighs on India’s Nifty 50 Amid Disappointing Q4 Earnings

At the close, the Nifty 50 was at 22,302.50 down by 0.62%

On May 7, the NSE Nifty 50 commenced on a positive note but swiftly reversed course, ending the day with a decline of 0.62% and closing below the 22,350 mark. Both India’s benchmark indices, Sensex and Nifty 50, faced selling pressure throughout the session, largely attributed to disappointing Q4 earnings, denting market confidence near record highs.

The Nifty 50 witnessed a fall of -140.20 points, underscoring the market’s struggle to maintain breadth near all-time highs. Overbought conditions and a decline in market breadth contributed to the selling sentiment prevalent in the market.

Despite favorable global cues initially, the domestic market experienced substantial profit booking, leading to a notable increase in the Volatility Index (India VIX) by about 6%. However, volatility receded later in the day, with the index closing down at 22,302.

While global markets remained buoyant amidst expectations of central bank rate cuts, the domestic market continued its consolidation phase. Factors such as a tepid turnout in ongoing elections and premium valuations contributed to profit booking. However, the FMCG sector emerged as a notable gainer, buoyed by expectations of improved volume growth in rural areas, supported by favorable monsoon forecasts.

Bank Nifty: Down by 1.25%

The Bank Nifty exhibited a brief upward movement at the opening bell before reversing course, ultimately recording a decline of 1.25%. It closed in the red zone at 48,285.35, reflecting the prevailing bearish sentiment. Similarly, the BSE Sensex also experienced a downturn, dropping by 0.52% and concluding at a low of 73,511.85.

In the sectorial realm, the Fast Moving Consumer Goods (FMCG) sector has shown significant growth, marking a rise of 2.02%. Notably, Marico Ltd. experienced a notable surge, recording a gain of 9.77%, closely followed by Godrej Consumer Products Ltd. with a gain of 5.59%.

However, contrasting this growth, the Realty sector witnessed a decline, registering a loss of 3.49%. Among the companies in this sector, Sobha Ltd. faced a notable decrease of -5.84%, while Prestige Estates Projects Ltd. observed a decline of -5.75%.

Foreign Institutional Investors (FIIs/FPIs) were observed to have a net sell-off, with a buy value of Rs. 13,726.76 Cr. and a sale value of Rs. 17,395.60 Cr., resulting in a net value of -Rs. 3,668.84 Cr. On the other hand, Domestic Institutional Investors (DIIs) exhibited a net buying trend, recording a buy value of Rs. 13,202.80 Cr. and a sale value of Rs. 10,898.30 Cr., leading to a net value of Rs. 2,304.50 Cr.

Bank Nifty

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

The gainers included Kotak Bank with a 1.15% increase.

On the other hand, the biggest losers in the sector included Punjab National Bank with a 3.93% decline, Bandhan Bank with a 2.97% decline, IndusInd Bank with a 2.90% decline, IDFC First Bank with a 2.81% decline, and Federal Bank with a 2.69% decline. These results suggest that most of the banking stocks not performed better for the day.

Rupee Appreciates Marginally Against US Dollar Amidst Market Volatility

In early trade on Tuesday, the Indian rupee exhibited stability against the US dollar, appreciating by 4 paise to reach 83.48, supported by a positive trend in domestic equities. However, factors such as the dollar’s strength in the global market, elevated crude oil prices, and foreign fund outflows posed challenges, limiting the rupee’s upward movement.

Opening at 83.48 against the greenback at the interbank foreign exchange market, the rupee’s marginal rise from its previous close signals cautious optimism. Despite a slight dip on Monday, settling 7 paise lower at 83.52 against the US dollar, India’s robust economic fundamentals, fortified by substantial foreign exchange reserves, empower the Reserve Bank of India to effectively manage any downward pressure on the currency.

Meanwhile, the dollar index, indicating the greenback’s strength against a basket of currencies, stood at 105.18, registering a modest increase of 0.13%. Additionally, Brent crude futures, a global oil benchmark, saw a slight uptick of 0.29% to $83.57 per barrel. These global factors, coupled with domestic market trends, will continue to influence the rupee’s trajectory, warranting close monitoring by investors and policymakers alike.

Stocks Highlights

Hindustan Unilever Ltd. witnessed a commendable uptick in its share price, rising by 5.20% from its previous close of Rs 2,256.20 to Rs 2,373.55. Notably, only a mere 0.98% of trading sessions in the last 19 years have seen intraday gains surpassing 5%.

Analyzing the company’s financial health, it’s evident that Hindustan Unilever Ltd. has maintained prudent expense management. With less than 1% of operating revenues allocated towards interest expenses and 4.86% towards employee costs in the fiscal year ending 31 Mar, 2024, the company exhibits a balanced approach to cost optimization.

Moreover, recent market indicators suggest a positive outlook for the stock, with a buy signal triggered by a 20-day moving crossover. Historical data indicates an average price gain of 2.19% within 7 days following this signal over the past 5 years.

In contrast, Bajaj Auto Ltd. faced a downturn, with its share price decreasing by -3.98% to Rs 8,692.05. Despite this, the company announced a dividend of Rs 80.0 per share on 18 Apr, 2024, showcasing commitment to shareholder value.

While Bajaj Auto Ltd. grapples with new debt obligations after five years, its impressive revenue growth of 23.02% outpacing the 3-year CAGR of 16.68% highlights operational strength. Despite recent challenges, the company has delivered robust returns, outperforming the Nifty 100 index with a 3-year return of 134.11%.

Advance Decline Ratio

Today, the advance-decline ratio was 0.30, and the market breadth was negative. The volatility index India Vix increased by 2.45 percent to settle at 17.01 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 597
Decliners – 1995
52Wk High – 81
52Wk Low – 25
High Band Hitters – 86
Low Band Hitters – 129
200d SMA – 20811
50d SMA – 22301
20d SMA – 22444

Top Gainers and Losers Stocks

The top gainers were Hindustan Unilever (+5.20%), Tech Mahindra (+2.52%), Nestle India (+2.06%), Britannia (+2.05%), and ITC (+1.44%).

The top losers were Bajaj Auto (-3.98%), Power Grid (-3.65%), ONGC (-3.07%), IndusInd Bank (-2.90%), and Hindalco (-2.86%).

Top Gainers and Losers Sector

The top gainers sector were FMCG (+2.02%), and IT (+0.77%).

The top losers sector were Realty (-3.49%), Metal (-2.39%), Oil & Gas (-1.88%), Pharma (-1.86%), and Auto (-1.83%).

SECTORS – NOTABLE ACTION
FMCG +2.02%
IT +0.77%
REALTY -3.49%
METAL -2.39%
OIL & GAS -1.88%

Stocks Ban List

(SEBI) F&O ban list (BALRAMCHIN open at -386.40 and close at -377.00), (SAIL open at -163.00 and close at -156.15), (GMRINFRA open at -83.45 and close at -79.00), (IDEA open at -12.85 and close at -12.40), (ABFRL open at -250.50 and close at +252.80), and (BIOCON open at -302.10 and close at -295.05) 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.

ZEEL, PNB, HINDCOPPER, LICHSGFIN, CANBK, COFORGE, INDIACEM, PEL, BSOFT, and IDFCFIRSTB stocks has the possibilities of entrance in the ban list.

Daily Pivots

As per the above pivots data, 22100 to 22500 is the Nifty 50 trading range.

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Global Cues Drive Positive Start, Heavyweight Profit-Taking Turns Negative

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