Why Did the Nifty 50 Drop Today Despite Positive Asian Signals?

At the close, the Nifty 50 was at 24,139.00 down by 0.85%

The NSE Nifty 50 experienced a challenging session on August 13, starting in the red and continuing its downward spiral, ultimately closing 0.85% lower at 24,139 points. This marked the second consecutive session of losses for the benchmark index, as selling pressure intensified across all sectors.

Despite positive cues from Asian markets, Nifty was unable to hold its ground, plummeting below the critical 24,150 mark. The index touched an intraday low of 24,117 before slightly recovering to its closing level, signaling a bearish trend in the market.

India’s volatility index surged by nearly 3% to reach the 16.2 level, reflecting growing investor anxiety. The mid-cap and small-cap indices, often seen as more volatile, fell by over a percent each, underperforming the headline indices. Despite the broader market’s resilience earlier this year, concerns over high valuations have begun to take their toll, with market experts cautioning against further downside risks.

The market’s decline was exacerbated by mixed macroeconomic data. While the Consumer Price Index (CPI) inflation dropped to a near five-year low in July, the Industrial Production (IIP) growth slowed to 4.2% in June, dampening investor sentiment.

The selling pressure was particularly pronounced in banking and financial heavyweights, such as HDFC Bank, which declined sharply due to disappointing passive fund inflows following the recent MSCI index rebalancing.

As the Nifty 50 continues its correction phase, the near-term outlook remains negative, with the index struggling to break above the 21-day Exponential Moving Average (EMA). With all key sectors in the red and broader indices underperforming, the market’s attention is now shifting to underlying earnings growth, which appears bleak this quarter. Will the Nifty find support and reverse its downtrend, or is more pain ahead for investors?

Bank Nifty: Down by 1.48%

The Bank Nifty and the BSE Sensex ending the day deep in the red. The Bank Nifty, a key index that tracks the performance of the banking sector, opened with a sharp decline and continued its downward trend throughout the session. By the close, it had dropped by 1.48%, finishing at 49,831.85.

Similarly, the BSE Sensex, India’s benchmark index for the stock market, also struggled to find any upward momentum. The Sensex closed the day down by 0.87%, settling at 78,956.03, a notable low that reflects the broader market’s pessimism.

In the sectorial front, the Consumer Durables sector emerged as the clear winner, posting a substantial gain of 1.30%. This sectoral rise was driven by strong performances from companies like Blue Star Ltd., which surged by an impressive 5.72%, and V-Guard Industries Ltd., which followed closely with a gain of 3.39%.

Conversely, the Financial Services sector bore the brunt of the day’s losses, falling by 1.87%. Within this sector, HDFC Bank Ltd. experienced a significant decline, with its share price dropping by 3.26%. Power Finance Corporation Ltd. also faced a challenging day, losing 2.90% of its value.

Foreign Institutional Investors (FII) recorded a substantial net outflow of Rs. 2,107.17 crore. They purchased shares worth Rs. 14,502.44 crore but sold off a significantly higher amount, totaling Rs. 16,609.61 crore.

On the other hand, Domestic Institutional Investors (DII) showed a positive net inflow of Rs. 1,239.96 crore. They bought shares worth Rs. 13,005.78 crore and sold shares valued at Rs. 11,765.82 crore.

Bank Nifty

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

The gainers included Federal Bank with a 0.43% increase, and AU Bank with a 0.06% increase.

On the other hand, the biggest losers in the sector included HDFC Bank with a 3.26% decline, State Bank of India with a 1.92% decline, Bank of Baroda with a 1.57% decline, Bandhan Bank with a 1.56% decline, and Kotak Bank with a 1.11% decline. These results suggest that most of the banking stocks not performed better for the day.

Gold and Silver Rate (INR) 13th August, 2024

Rupee Holds Steady Amidst Market Turmoil

A Balancing Act The Indian rupee has shown remarkable resilience, ending the day flat at 83.97 against the US dollar. This comes amidst a backdrop of weak domestic markets and rising crude oil prices, factors that typically exert downward pressure on the currency.

• Geopolitical tensions: The escalating conflict in the Middle East has created a risk-off environment, which generally strengthens the dollar.
• Domestic market weakness: The decline in Indian stock indices would normally weaken the rupee, as foreign investors tend to sell their holdings.
• Rising oil prices: Higher oil prices increase India’s import bill, putting downward pressure on the rupee.
• Dovish Fed stance: Recent comments from Federal Reserve officials suggesting a potential pause in interest rate hikes have supported risk assets, including emerging market currencies like the rupee.

The rupee’s ability to hold its ground is a testament to the Indian economy’s relative strength. However, the currency remains vulnerable to global developments, especially any escalation in geopolitical tensions or a sharp rise in oil prices.

Looking ahead, the rupee’s trajectory will be influenced by:

• The release of US economic data, particularly inflation and retail sales figures.
• The evolution of the geopolitical situation in the Middle East.
• The trend in global crude oil prices.
• The performance of the Indian equity market.

It’s a tightrope walk for the rupee, and traders will be closely monitoring these factors in the coming days.

What do you think will be the key driver of rupee movement in the near term?

Stocks Highlights

Titan Company Ltd. and Bharat Petroleum Corporation Ltd. have presented investors with contrasting narratives. As the market closed, Titan’s share price rose by 1.93%, settling at Rs. 3,385.00, a notable increase from its previous Rs. 3,320.85. Intriguingly, only 2.08% of the trading sessions over the last 19 years have witnessed intraday declines exceeding 5%, highlighting Titan’s resilience.

The company has also outshone its historical performance, delivering an impressive Return on Equity (ROE) of 37.21% for the fiscal year ending March 31, 2024. This figure significantly surpasses its 5-year average ROE of 25.48%, indicating a robust financial trajectory. Furthermore, when pitted against the Nifty 100, Titan’s stock delivered an 85.58% return over three years, dwarfing the Nifty 100’s 54.19% gain. These figures underscore Titan’s strong market position and investor confidence.

On the other hand, Bharat Petroleum Corporation Ltd. (BPCL) tells a different story. BPCL’s share price dipped by 3.54%, closing at Rs. 321.60, down from Rs. 333.40. Over the past 19 years, only 1.79% of trading sessions recorded intraday gains surpassing 5%, pointing to the rarity of such spikes.

Despite achieving a commendable ROE of 35.51% for the fiscal year ending March 31, 2024, far exceeding its 5-year average of 21.77%, BPCL faced a setback in its revenue stream. For the first time in three years, the company experienced a sales decline, with a 5.13% decrease in topline figures. Additionally, a daily MACD crossover signal emerged, historically leading to an average price drop of 3.65% within ten days—a clear sell signal favoring bearish sentiments.

Advance Decline Ratio

Today, the advance-decline ratio was 0.36, and the market breadth was negative. The volatility index India Vix increased by 1.89 to settle at 16.17 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 713
Decliners – 1984
52Wk High – 121
52Wk Low – 31
High Band Hitters – 92
Low Band Hitters – 104
200d SMA – 22153
50d SMA – 24037
20d SMA – 24514

Top Gainers and Losers Stocks

The top gainers were Titan (+1.93%), Apollo Hospitals (+1.50%), Tata Consumer (+0.86%), Dr. Reddy (+0.78%), and HCL Technologies (+0.55%).

The top losers were BPCL (-3.54%), HDFC Bank (-3.26%), HDFC Life (-2.78%), Shriram Finance (-2.53%), and ONGC (-2.14%).

Top Gainers and Losers Sectors

The top gainers sector were Consumer Durables (+1.30%), and IT (+0.01%).

The top losers sector were Financial Services (-1.87%), Metal (-1.64%), Oil & Gas (-1.05%), Media (-0.95%), and Auto (-0.78%).

SECTORS – NOTABLE ACTION
CONSUMER DURABLES +1.30%
IT +0.01%
FINANCIAL SERVICES -1.87%
METAL -1.64%
OIL & GAS -1.05%

Stocks Ban List

(SEBI) F&O ban list (INDIACEM close at -364.95), (SUNTV open at close at +819.70), (LICHSGFIN close at -641.70), (SAIL close at -128.14), (BANDHANBNK close at -192.60), (ABFRL close at -312.70), (GRANULES close at -676.45), (MANAPPURAM close at -206.71), (BIOCON close at -337.10), (INDIAMART close at -2699.40), (PNB close at -114.30), (RBLBANK close at -214.25), (BSOFT close at -565.65), (HINDCOPPER close at +312.95), and (ABCAPITAL close at -207.69) 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, PEL, IEX, IDFCFIRSTB, NATIONALUM, SBICARD, CHAMBLFERT, CONCOR, BANKBARODA, IDEA, and ADANIENT stocks has the possibilities of entrance in the ban list.

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

Daily Pivots

As per the above pivots data, 23950 to 24350 is the Nifty 50 trading range.

Read Previous -Daily Insights- here
SEBI’s Denial and Nifty’s Decline—What’s Really Behind the Drama?
Has the Nifty50 Just Rewritten the Record Books? What Fueled the Rise!
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This article is only for educational purposes and is not an investment advice.