Closing Bell: Nifty settles below 17,400, Sensex falls 175 pts; realty, banks outshine

Taking Stock | Sensex down 175 points, Nifty below 17,400; realty, banks outperform

The BSE midcap index was down 0.6 percent and smallcap index fell 1 percent... Read More

Markets started the week on a feeble note and lost nearly half a percent, in continuation to the prevailing corrective phase. After the initial downtick, Nifty breached the budget day low i.e. 17,353 levels and oscillated in a narrow band thereafter. Meanwhile, pressure in the IT, metal and auto majors kept the tone negative however resilience in the banking pack capped the damage. And, a fresh fall in the broader indices further deteriorated the sentiment.

The pressure in banking and financial majors was weighing on the sentiment during the initial phase of correction and now it’s cascading to the other sectors as well. Besides, the fall in the US markets is adding to the pessimism. Amid all, we feel it’s prudent to wait for a rebound for creating fresh shorts citing oversold positions and some resilience in select private banking names.

Weak Asian markets cues and worsening global macro economic indicators like higher inflation level, rising interest rates and volatile commodity prices are forcing investors to slash their equity exposure. Besides, currency fluctuation coupled with concerns of slowing growth and FII outflows are also keeping the mood bearish.

Technically, on intraday charts, Nifty has formed a double bottom and also formed a Hammer candlestick pattern on daily charts which is broadly positive.

We could see a quick pullback rally if the index trades above 17,300 and above the same the pullback move could continue till 17,500- 17,600 levels. On the flip side, a fresh round of selling is possible only after the dismissal of 17,300. Below the same the index could slip till 17,230-17,200.

Bajaj Auto shares corrected more than 5 percent for first time since June 2022 and formed large bearish candlestick pattern on the daily charts, following nervousness in overall equity markets on February 27.

This is the top loser in Nifty Auto index which corrected over 2 percent and the second biggest loser in Nifty50 which was down seven-tenth of a percent.

After a month long consolidation, the stock has seen a big gap down opening and traded way below all key moving averages, down 5.5 percent at Rs 3,640 on the NSE.

The momentum indicator RSI (relative strength index 14) also dropped significantly to 35 level, but one needs to watchful for hidden bullish divergence with price making higher low and RSI making lower low, indicating some signs of reversal.

"The latest gap down opening suggests continued downside pressure, with prices falling below the prior three weeks' lows and breaching the Lower Bollinger band, indicating increased volatility in the downward direction," Vidnyan Sawant, AVP - Technical Research at GEPL Capital said.

He feels the momentum indicator, RSI, has fallen below the 50 mark, suggesting a lack of positive momentum.

"The key support level for the stock is around Rs 3,450, while a move beyond Rs 4,000 is likely to spark further bullish momentum till record Highs (Rs 4,361.40), the expert said.

Bears continued to wreak havoc in the domestic market as the latest data releases from the US heightened the existing worries of aggressive rate hikes. The personal consumption expenditure in the US, which is Fed’s key monitorable of inflation, increased in January, pressuring investors to stay away from equities markets. The US dollar index surpassed 105, adding further pressure on the INR.

The Nifty opened on a weak note and witnessed volatile trading action throughout the day. It closed the day on a negative note for the seventh consecutive trading session.

On the daily charts we can observe that the Nifty has broken the support of the rising support trend line and also closed below it which is a sign of weakness. The Nifty is hovering around the 200-day moving average (17,376) which is likely to provide cushion and attract interest from long term investors.

The hourly momentum indicator has a positive divergence along with a positive crossover which indicates that selling pressure is weakening on the downside. After a continuous fall for seven trading sessions a pullback is possible, however it is unlikely to be a trend reversal.

Overall, the downtrend is still intact and any bounce should be used as an opportunity to create fresh short positions. Today, Nifty has achieved our short-term target of 17,350 and hence we are revising it downwards to 17,200.

Indian rupee ended 9 paise lower at 82.84 per dollar against previous close of 82.75.

Benchmark indices ended lower for the seventh straight session on February 27 with Nifty around 17,400.

At Close, the Sensex was down 175.58 points or 0.30% at 59,288.35, and the Nifty was down 73.10 points or 0.42% at 17,392.70. About 944 shares have advanced, 2511 shares declined, and 174 shares are unchanged

Adani Enterprises, Bajaj Auto, UPL, Tata Steel and Infosys were among the top losers on the Nifty, while gainers were ICICI Bank, Kotak Mahindra Bank, Power Grid Corporation, SBI and HDFC Life.

Except bank and realty, all other sectoral indices ended lower.

The BSE midcap index down 0.6 percent and smallcap index fell 1 percent.

-Buy rating, target at Rs 377 per share
-Company’s R&D center came up in 2019 & is ramping up
-Company is putting in significant R&D efforts across multiple segments
-Benefits of R&D will start flowing over next few years as products are rolled out
-Believe margin could be impacted due to price cut in pumps & high marketing expenses
-Company will be able to deliver ahead of industry revenue growth over next few years

Crompton Greaves Consumer Electrical was quoting at Rs 300.75, up Rs 2.10, or 0.70 percent on the BSE.

Indian Rupee depreciated by 0.13% on weak domestic markets and a strong greenback. Surge in crude oil prices and FII outflows also weighed on Rupee. Dollar strengthened on concerns over higher interest rates for longer amid higher inflation and upbeat economic data from US. Core PCE deflator, the primary gauge of inflation used by the Fed rose to 4.7% in January, above forecast of 4.3%.

We expect Rupee to trade with a negative bias on risk aversion in global markets and positive greenback. Month-end Dollar demand from importers may weigh on Rupee.

However, any intervention by the Reserve Bank of India may prevent sharp fall in Rupee. Traders may remain cautious ahead of durable goods orders and pending home sales data from US. USDINR spot price is expected to trade in a range of Rs 82.50 to Rs 83.30.