Will Today’s Unexpected Surge in NSE Nifty 50 Hint at a Bigger Market Move?

At the close, the Nifty 50 was at 25,010.90 up by 0.24%

Thursday was a remarkable day for Indian markets as the NSE Nifty 50 started strong, rising by 0.24% to close above the 25,000 mark for the first time. This milestone, closing at 25,010.9, was driven by a global rally following U.S. Federal Reserve Chair Jerome Powell’s suggestion of a potential interest rate cut in September. The Nifty 50’s ascent extended its winning streak to a fifth consecutive session, reflecting investor optimism.

However, despite the strong start, the market’s gains were tempered by a negative divergence in the RSI, which pulled the index slightly lower from its peak. The Nifty ultimately settled with a gain of 59.75 points, illustrating a breakout from a sideways consolidation and indicating a potential resumption of its upward trend.

The broader market, including MidCap and SmallCap stocks, did not share in the exuberance, closing with a negative bias. This divergence was influenced by rising crude oil prices amid geopolitical tensions in the Middle East and profit-booking in sectors like capital goods, realty, and auto, which faced below-expected sales figures.

Globally, U.S. equities soared following Powell’s dovish comments, with major tech giants leading the charge. Investors are now eyeing U.S. jobless claims data and the Bank of England’s interest rate decision for further market cues.

As the Nifty 50 hits new highs, what strategies should investors adopt in the face of mixed signals from global and domestic markets? Could geopolitical tensions and sector-specific challenges derail this bullish momentum?

Bank Nifty: Up by 0.02%

The Indian equity market displayed a bullish sentiment today, with both key indices closing in the green. The Bank Nifty commenced trading with a modest 0.02% gain and maintained its upward trajectory to conclude the day at 51,564.00. In tandem, the BSE Sensex mirrored this positive trend, registering a 0.15% increase and culminating at a robust 81,867.55.

On the sectoral front, the oil and gas sector experienced a notable uptick of 0.35%, bringing fresh optimism to the market. Leading this charge, Oil India Ltd. surged ahead with a gain of 3.71%, closely followed by Adani Total Gas Ltd., which rose by 2.17%.

However, the media sector faced a stark contrast, emerging as the top loser with a significant drop of 1.89%. Network18 Media & Investments Ltd. took a hit, plummeting by 4.53%, while Zee Entertainment Enterprises Ltd. saw a decline of 4.34%.

Foreign Institutional Investors (FII) were active buyers, with a total purchase value of Rs. 17,860.22 crore and a sale value of Rs. 15,770.94 crore, resulting in a net positive inflow of Rs. 2,089.28 crore.

In contrast, Domestic Institutional Investors (DII) displayed a more cautious stance. They recorded a buy value of Rs. 13,956.40 crore against a sale value of Rs. 14,293.43 crore, leading to a net outflow of Rs. 337.03 crore.

Bank Nifty

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

The gainers included HDFC Bank with a 1.97% increase, and Axis Bank with a 0.51% increase.

On the other hand, the biggest losers in the sector included Bandhan Bank with a 2.10% decline, State Bank of India with a 1.20% decline, Bank of Baroda with a 1.04% decline, Kotak Bank with a 0.95% decline, and Punjab National Bank with a 0.93% decline. These results suggest that most of the banking stocks not performed better for the day.

Gold and Silver Rate (INR) 01st August, 2024

Rupee Holds Ground Amidst Global Currency Crossfire

The Indian rupee displayed remarkable resilience on Thursday, closing nearly unchanged against the U.S. dollar. This stability was achieved despite a challenging external environment marked by a weakening yuan and robust dollar demand from domestic importers. The Reserve Bank of India’s (RBI) suspected intervention played a crucial role in offsetting these pressures.

While the rupee held its fort, the dollar index surged by 0.3%, erasing previous day losses. The U.S. Federal Reserve’s decision to maintain interest rates, coupled with hints of a potential September rate cut, fueled this dollar strength.

The rupee’s early gains, courtesy of foreign bank offers, were short-lived as importer demand for dollars intensified. This dynamic tug-of-war kept the local currency on a tight leash.

Interestingly, dollar-rupee forward premiums climbed to a six-month high, driven by a decline in U.S. bond yields. Fed Chair Jerome Powell’s openness to a September rate cut if economic conditions permit has ignited expectations of a policy easing cycle.

The market is now keenly watching how these global and domestic factors will shape the rupee’s trajectory in the coming days. Will the RBI continue its interventionist stance? How will the evolving interest rate scenario in the U.S. impact the dollar’s strength? These questions will be key determinants of the rupee’s performance.

Stocks Highlights

Power Grid Corporation of India Ltd. has experienced a notable surge in its share price, moving up by 3.82% from its previous close of Rs 348.20. The stock’s last traded price now stands at Rs 361.50, reflecting investor confidence and a strong market performance. This upward trend is bolstered by a dividend announcement of Rs 2.75 per share set for May 22, 2024, with a record date of August 16, 2024. In addition, a daily MACD crossover yesterday signals a bullish trend, historically resulting in an average price gain of 3.38% within 10 days over the past decade.

Notably, the stock has provided a remarkable 3-year return of 171.26% compared to the Nifty 100’s 61.48%. The company’s financials reveal that it spent 19.14% of its operating revenues on interest expenses and 5.31% on employee costs in the year ending March 31, 2024.

On the flip side, Mahindra & Mahindra Ltd. has seen its share price dip by 2.78%, down from Rs 2,907.80 to Rs 2,827.00. Despite this decline, the company has delivered an impressive Return on Equity (ROE) of 17.02% for the year ending March 31, 2024, outperforming its 5-year average of 11.97%.

Financially, Mahindra & Mahindra Ltd. allocated 5.42% of its operating revenues to interest expenses and 7.68% to employee costs in the same period.

Advance Decline Ratio

Today, the advance-decline ratio was 0.52, and the market breadth was negative. The volatility index India Vix decreased by 2.41 to settle at 12.93 and the FIIs were net buyers today.

DAILY MARKET ACTION
Advancers – 926
Decliners – 1767
52Wk High – 209
52Wk Low – 27
High Band Hitters – 120
Low Band Hitters – 93
200d SMA – 21973
50d SMA – 23798
20d SMA – 24568

Top Gainers and Losers Stocks

The top gainers were Power Grid (+3.82%), Coal India (+3.47%), ONGC (+2.03%), HDFC Bank (+1.97%), and Dr. Reddy (+1.96%).

The top losers were M&M (-2.78%), Tata Steel (-1.37%), Hero MotoCorp (-1.35%), Britannia (-1.32%), and Tata Motors (-1.21%).

Top Gainers and Losers Sectors

The top gainers sector were Oil & Gas (+0.35%), FMCG (+0.15%), Financial Services (+0.10%), and Pharma (+0.06%).

The top losers sector were Media (-1.89%), Realty (-1.70%), Auto (-0.74%), Consumer Durables (-0.49%), and IT (-0.35%).

SECTORS – NOTABLE ACTION
OIL & GAS +0.35%
FMCG +0.15%
FINANCIAL SERVICES +0.10%
MEDIA -1.89%
REALTY -1.70%
AUTO -0.74%

Stocks Ban List

(SEBI) F&O ban list (INDIACEM open at -364.30 and close at -363.30), and (GRANULES open at +631.00 and close at +631.50) 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.

RBLBANK, GNFC, INDIAMART, MANAPPURAM, INDUSTOWER, BSOFT, BANDHANBNK, ABFRL, IDEA, and VEDL stocks has the possibilities of entrance in the ban list.

Daily Pivots

As per the above pivots data, 24800 to 25150 is the Nifty 50 trading range.

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