The Struggle Continues: Nifty’s Decline and the Road Ahead for Indian Markets

NiftyTrader • November 18, 2024

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Index	Price	Change	% Chg
Nifty 50	23,453.80	-78.90	-0.34%
Nifty MidCap 50	15,079.15	+31.05	-0.21%
Nifty SmallCap 50	8,448.15	–50.30	-0.59%
Nifty Bank	50,363.80	+184.25	+0.37%
Nifty Financial	23,257.70	+57.40	+0.25%
BSE SENSEX	77,339.01	–241.30	–0.31%

At the close, the Nifty 50 was at 23,453.80 down by 0.34%

It started off looking promising, but things quickly took a turn for the worse. NSE Nifty 50 kicked off with a small gap up, showing some hope—but then, the market turned red. The Nifty closed at 23,454, down by 0.34%. Is this the beginning of something bigger? The unsettling trend of declining equity indices weighed heavily, as global cues remained weak and foreign investors pulled funds out of the Indian markets.

The Nifty’s Longest Losing Streak: What’s Next?

For the 7th straight day, the Nifty continued its descent, marking its longest losing streak since February 2023. The sell-off is real. IT and energy stocks were particularly hit hard. It wasn’t just a bad day; it was a volatile one—the Sensex fluctuated by a staggering 900 points.

But here’s the real kicker: foreign investors have pulled out a massive ₹22,420 crore from Indian markets this month alone. Why? Concerns about high domestic valuations, a rising U.S. dollar, and a surging U.S. bond yield have spooked investors. Could this signal a bigger shift in market sentiment?

Bearish Mood, But Will There Be Hope?

Here’s what’s keeping investors up at night: the Nifty has broken through its crucial 200-day exponential moving average (DEMA), a key support level that traders closely watch. The market feels weaker than ever, with foreign portfolio investors (FPIs) withdrawing funds at an alarming pace. The rise of U.S. yields makes emerging markets like India less attractive.

But could there be a silver lining? The short-term recovery looks possible, with some experts eyeing a potential rise to 23,700-23,800 levels. However, the downside risk looms with strong support sitting at 23,200–23,300. Will this be a temporary dip, or is the market heading into a deeper slump?

IT Stocks Dragging the Market Down: What’s the Real Impact?

Federal Reserve Chair Jerome Powell is keeping everyone on edge with hints of slower interest rate cuts, which hit IT stocks hard. The likes of TCS and Infosys were among the top losers. Adding fuel to the fire, earnings growth is underwhelming, and foreign outflows have reached around $15 billion in the last month.

But here’s an interesting twist—metal stocks, especially after China’s decision to reduce tax rebates on aluminum and copper, gained some ground. Could this be a clue to where smart money might be moving next?

Global Market Shivers: What’s the Broader Impact?

Overseas, global stocks have also been on shaky ground, with U.S. 10-year treasury yields hitting 4.45%, signaling trouble. The dollar’s strength continues to drag on emerging markets, including India. With global shares mostly in the red, will these international pressures spill over into India’s already weak market?

Oil Prices and Currency Woes: The Perfect Storm?

Oil prices have seen a slight uptick, with Brent crude edging higher. However, fears about global oil surpluses and weaker demand in China continue to weigh on the market. On top of that, the Indian rupee remains under pressure, barely holding its ground due to portfolio outflows.

The Bottom Line: Are You Ready for What Comes Next?

The overall market setup remains weak—the bearish sentiment refuses to budge. But, after such a prolonged correction, could the Nifty finally find some relief in the coming days? With support levels at risk and volatility surging, it’s not all doom and gloom. Will the market surprise us, or is this just the calm before a bigger storm? Investors, buckle up!

Bank Nifty: Up by 0.37%

Bank Nifty managed to break away from the negative trend. Opening in the green with a modest gain of 0.37%, the Bank Nifty held its ground and closed higher at 50,363.80. On the other hand, BSE Sensex was unable to hold onto its gains, ending the day in the red with a 0.31% decline, closing at 77,339.01.

In the sectorial front, the Metal Index surged impressively by 1.90%, showcasing resilience and investor optimism. Among its leading players, National Aluminium Company Ltd. dazzled with a remarkable 8.61% gain, while Hindalco Industries Ltd. followed suit, posting a solid increase of 3.79%.

On the flip side, the Information Technology (IT) sector painted a contrasting picture, recording a steep decline of 2.32%, making it the day’s biggest loser. Within this sector, tech giant Tata Consultancy Services Ltd. dropped by -3.11%, reflecting concerns about tightening budgets in key markets. MphasiS Ltd., another prominent player, saw its stock slide by -2.83%.

FIIs have been net sellers, with a net outflow of ₹1,403.40 crore, reflecting selling pressure in the Indian equity markets. The buy value stood at ₹14,256.29 crore, while the sale value reached ₹15,659.69 crore.

DIIs displayed more confidence in the market, as they recorded a net inflow of ₹2,330.56 crore. DIIs bought stocks worth ₹11,521.42 crore and sold stocks worth ₹9,190.86 crore.

Bank Nifty

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

The gainers included IDFC First Bank with a 3.39% increase, Federal Bank with a 1.79% increase, State Bank of India with a 1.23% increase, Punjab National Bank with a 1.12% increase, and HDFC Bank with a 0.92% increase.

On the other hand, the biggest losers in the sector included Axis Bank with a 1.34% decline, IndusInd Bank with a 1.24% decline, and ICICI Bank with a 0.37% decline. These results suggest that some of the banking stocks performed better for the day.

Gold and Silver Rate (INR) 18th November, 2024

22 K Gold / g	₹ 6,995	+ ₹ 60
24 K Gold / g	₹ 7,631	+ ₹ 66
18 K Gold / g	₹ 5,723	+ ₹ 49

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

Rupee Bounces Back: A Brief Respite or Just a Pause? 🌍💸

The Indian rupee has managed to claw back from its all-time low, gaining 6 paise to settle at 84.40 against the US dollar on Monday. This recovery comes on the back of a retreating US dollar, but the gains were tempered by ongoing challenges that continue to affect the local currency.

What’s Fueling the Recovery?
The rupee opened at 84.42 and briefly touched an intra-day high of 84.37, finally closing at 84.40 (provisional). On Thursday, the rupee had slipped to an all-time low of 84.46 against the dollar, intensifying worries about the currency’s future. Despite the recent uptick, the strength of the US dollar is still a looming concern.

While the retreating American currency gave the rupee a boost, the unabated foreign fund withdrawals and the upward movement in crude oil prices kept the recovery in check. Foreign Institutional Investors (FII) have been pulling out money, which has kept sentiment in the domestic equity markets tepid. However, the reduction in FII selling in recent days has provided some temporary relief.

What’s Next for the Rupee?
Jateen Trivedi, VP of Research at LKP Securities, believes the rupee will likely find support in the 84.45-84.52 range while facing resistance around 84.25-84.30. But can this minor support hold, or is the rupee headed for more turbulence?

The Bigger Picture: Meanwhile, the dollar index—which tracks the US dollar’s performance against six major currencies—dipped by 0.06% to 106.55, offering some hope for the rupee. Yet, the Brent crude price saw an increase of 0.79%, reaching USD 71.60 per barrel, adding pressure to India’s import costs.

Will the Rupee Continue to Find Support?
While the rupee’s recovery is welcome, external pressures remain significant. Will foreign outflows and crude oil prices continue to cap the rupee’s gains, or is this just a brief respite before the next wave of volatility?

Keep an eye on the next few trading sessions to see if this recovery can turn into a more sustained upward trend.

Stocks Highlights

Hindalco Industries Ltd. – A Shining Star or a Dimming Light?
Hindalco’s share price has jumped by 3.79% from its previous close of Rs 627.35, with the stock now trading at Rs 651.10. But here’s the twist: despite this uptick, the company has faced a 3.12% decline in sales, marking its first revenue contraction in three years. Can Hindalco continue its upward trajectory despite this unexpected dip in its topline?

Stock Performance: A Mixed Bag
Over the last three years, Hindalco has outperformed the broader market with a return of 40.79% compared to the 33.14% return of the Nifty 100. However, when compared to the Nifty Metal index, which posted a 58.04% return, Hindalco’s performance lags behind. Is the stock’s growth sustainable, or are there looming challenges that could impact its future?

Cost of Operations: A Closer Look
Hindalco’s interest expenses account for 1.79% of its operating revenue, while employee costs have eaten up 6.84%.

Tata Consultancy Services Ltd.: A Tough Day for the IT Giant

On the flip side, Tata Consultancy Services Ltd. (TCS) experienced a 3.11% drop in stock price, falling from Rs 4,145.90 to Rs 4,017.15. So, what’s going wrong for TCS?

Zero Debt, But Not Enough to Boost Returns While TCS has no debt—a significant strength—its stock returns over the last three years were just 16.58%, which underperformed compared to the Nifty 100’s return of 33.14%. Even within the Nifty IT index, TCS only narrowly edged out the competition with 16.58% vs 15.68%. Does this suggest that TCS, despite its lack of debt, is falling behind in the race?

Employee & Interest Expense Breakdown:

Interest Expenses: Less than 1% of operating revenues.
Employee Costs: A staggering 58.17% of operating revenues. With such a large portion of costs tied to employee expenses, can TCS maintain profitability or will its massive payroll weigh it down?

Advance Decline Ratio

Today, the advance-decline ratio was 0.59 and the market breadth was negative. The volatility index India Vix increased by 2.65 to settle at 15.17 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 1045
Decliners – 1768
52Wk High – 42
52Wk Low – 187
High Band Hitters – 131
Low Band Hitters – 157
200d SMA – 23561
50d SMA – 24862
20d SMA – 24177

Top Gainers and Losers Stocks

The top gainers were Hindalco (+3.79%), Hero MotoCorp (+2.69%), Tata Steel (+2.33%), Nestle India (+1.47%), and Hindustan Unilever (+1.46%).

The top losers were TCS (-3.11%), Dr. Reddy (-2.75%), Infosys (-2.65%), BPCL (-2.62%), and Cipla (-2.38%).

Top Gainers and Losers Sectors

The top gainer sectors were Metal (+1.90%), FMCG (+0.95%), Auto (+0.56%), Realty (+0.56%), and Financial Services (+0.25%).

The top losers were IT (-2.32%), Oil & Gas (-1.60%), Media (-1.32%), and Pharma (-0.96%).

SECTORS – NOTABLE ACTION
METAL +1.90%
FMCG +0.95%
AUTO +0.56%
IT -2.32%
OIL & GAS -1.60%
MEDIA -1.32%

Stocks Ban List

(SEBI) F&O ban list (GNFC close at +558.50), (AARTIIND close at -431.25), (GRANULES close at -529.10), (HINDCOPPER close at +264.40), and (ABFRL close at +291.55) 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.

SAIL, CHAMBLFERT, BANDHANBNK, MANAPPURAM, and NMDC stocks has the possibilities of entrance in the ban list.

ABFRL stocks has the possibilities of exit from the ban list.