Ajit Mishra, VP - Research, Religare Broking:
Markets tanked on the weekly expiry day and lost over 2%, tracking feeble global cues. Initially, the benchmark opened with an uptick, in reaction to the rate hike by the US Fed, which came in line with the expectation. However, it couldn’t sustain for long and gradually drifted lower as the day progressed.
The breakdown of March low i.e. 15,670 levels in Nifty on the weekly expiry day further added to the pressure. Consequently, the Nifty index settled around the day’s low to close at 15,360. All the sectoral indices traded in tandem and ended lower wherein the metal and media stocks were trashed badly. The broader indices too ended with the sharp cuts and lost in the range of 2.5-3.5%.
Markets are skeptical about how the global economies would attain growth amid the aggressive tightening. After the decisive breakdown below 15,650 in Nifty, the next major support zone exists around the 14,800-15,000 zone. We feel it’s prudent to stay light and align the positions accordingly until we see some decisive signal of reversal.
Prashanth Tapse, Vice President (Research), Mehta Equities
After witnessing a temporary relief that saw markets rebound in the morning session, Nifty’s gains evaporated as the benchmark fell hard and, most importantly, ended at its lowest point of the day. Actually, the outlook for sizzling core inflation is still troubling the big Nifty bulls. The fact that the Fed has stepped up to raise rates faster, the street suspects that the RBI may catch up with the hawkish Fed.
After today’s sharp plunge, we suspect bulls will have to battle hard in the backdrop of a hawkish Fed and RBI, spiking oil prices, inflation concerns, growth fears and persistent FIIs selling. Technically speaking, the immediate support for Nifty is seen at 15000 mark. Below 15000, expect the Nifty to quickly slip towards 14251 mark.
Osho Krishan, Sr. Analyst - Technical & Derivative Research, Angel One:
The market is a bit in the oversold region, and the zone of 15000-15200 might provide a temporary stay to the bears. For now, the zone of 15600-15700 is considered a daunting task for the bulls.
Going forward, our market is likely to remain volatile in the near term and is expected to mirror the moves from the global peers. Looking at the recent fall, it is advised to avoid undue risk and stay light on positions. Also, one needs to keep a close tab on the geopolitical developments and avoid aggressive bets till the volatility looms over.
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities:
Markets witnessed frenzied selling in the closing stages of the trading session, after a sharp slump in key European indices prompted investors to unwind their position further. Rising interest rates to curb inflation menace and falling crude oil prices is creating fear amongst investors that the world could be heading towards a major economic slowdown as demand falters.
Technically, the Nifty finally dismissed the key support of 15650 which it held since March. It was a decisive dismissal, that too on the day of the big event, thus inviting a pattern of further weakness in the medium term.
With the Nifty closing below 15400, the current bearish sentiment may see the index slide further to 15100 or 15000 in the near term.
On the other hand, the previous support of 15650-15730 levels has now become resistance to the market. The strategy should be to short trade if Nifty bounces to given levels and place a stop loss at 15800 or buy Nifty if it drops to 15100-15000 with a stop loss at 14950.
Vinod Nair, Head of Research at Geojit Financial Services:
Market is catching up to the reality that tight monetary policy is the lone card on the table lingering on high inflation. As a result, the global economy is bound to slow down further impacting corporate earnings, as indicated by MoM fall in US retail sales.
Valuations continue to trade on the marginally upper side of long-term averages and FIIs continue the selling mode. The stocks trading at high valuations & sectors like IT & Metals are the most impacted firms. In such a situation, preservation of capital is the theme by investing in a balanced portfolio of equity, debt & cash.
In equities, safe sectors will be those that are least impacted by inflation & aggressive policy like Finance & Services. Defensives like Consumption, IT, Pharma & Telecom can also be considered on a long-term basis.
Deepak Jasani, Head of Retail Research, HDFC Securities:
Nifty fell sharply on June 16 extending its losing streak to 5 days after giving up morning gains. Nifty opened gap up but soon after making an intraday high thereafter, it fell continuously to close near the intraday lows. At close, Nifty was down 2.11% or 331.6 points at 15360.2.
Nifty has breached the crucial support of 15660-15700 and this level will now act as a resistance. On falls 15315 could give some support, failing which the Nifty could head towards 14340 levels over the next few days/weeks.
Rate hike fears have depressed expected valuations of stocks on the one hand, while making debt instruments attractive. Stubbornly high inflation is impacting sentiments while fears of recession (that could bring down inflation) could lead to earnings downgrades.
Vinod Nair, Head of Research at Geojit Financial Services:
The early gains led by an in-line Fed policy was dampened as recessionary fears haunted global sentiments. A cut in growth projection and hints of continuation of aggressive policy in the next meeting instilled chances of a recession in the US economy.
In this current scenario, safe sectors will be those that are least impacted by inflation & aggressive policy like Finance & Services. Defensives like Consumption, IT, Pharma & Telecom are worthwhile on a long-term basis.
S Ranganathan, Head of Research at LKP securities:
FED effect coupled with a delayed start to the southwest monsoon wreaked havoc as the Nifty caved in below 15400 for the first time in the last one year.
As the street prepares for further front-loaded action by central banks in a bid to anchor spiralling inflation, its impact on consumer spending kept investors on the backfoot.
A mere glance at the stocks hitting one-year lows today is reflective of the risk-off mood on the street as only a handful of FMCG stocks displayed a green tick among front liners.
Market Close
Benchmark indices witnessed a sharp fall and ended at fresh 52-week low on June 16 amid selling across the sectors.
At close, the Sensex was down 1,045.60 points or 1.99% at 51,495.79, and the Nifty was down 331.60 points or 2.11% at 15,360.60. About 607 shares have advanced, 2680 shares declined, and 97 shares are unchanged.
Hindalco Industries, Tata Steel, Coal India, Tata Motors and ONGC were among the top Nifty losers, while gainers were HUL, Nestle India and Britannia Industries.
All the sectoral indices ended in the red with metal index fell over 5 percent.
BSE midcap and smallcap indices shed over 2 percent each.
Devarsh Vakil, Deputy Head, Retail Research, HDFC Securities
Tops and Bottoms are for fools and liars. We do not attempt to predict the exact levels. For investors who are not fully invested or who have raised cash in the recent past by booking profits, these times provide an opportunity to gradually raise equity portion of their portfolio. While shortlisting investable stocks one will have to be careful of not having exposure to sectors or stocks that have been derated due to very high valuations or very high profit forecasts that seem difficult to achieve.
Also stocks need to be examined closely for sustainability of earnings. Nobody can catch a bottom and hence it is necessary to begin this process and achieve an attractive entry point by averaging on the downside.
Kunal Valia, Chief Investment Officer - Listed Investments, Waterfield Advisors
75bps fed hike sound byte is just ripping through bonds in the US and ofcourse it's spilling over to Equities. Europe, closing asset purchase program or ending QE coupled with likely rate hike is impacting yields in main markets like Germany, france denting peripheral markets even harder.
Oil prices fall
Oil prices erased early gains to head lower on Thursday, a day after a fall triggered by a U.S. interest rate hike, though tight supply limited losses.
Brent crude futures were down 45 cents, or 0.4%, to $118.06 a barrel by 0906 GMT while U.S. West Texas Intermediate (WTI) crude futures fell 44 cents to $114.87, also off 0.4%.
Both contracts broadly stayed within the previous session's range.
Prices slipped more than 2% overnight after the Federal Reserve raised its key interest rate by 0.75%, the biggest hike since 1994.
BSE Oil & Gas index slipped 2 percent dragged by the Gujarat Gas, ONGC, Gail India
ED attaches assets worth Rs 17.7 crore in alleged Rs 804 crore fraud against SBI and BoB
Enforcement Directorate has attached assets worth Rs 17.7 crore in alleged Rs 804 crore fraud against SBI and BoB. The assets of M/S ABC Cotspin and related entities attached based on case filed by CBI, reported CNBC-TV18.
Bank Of Baroda was quoting at Rs 98.00, down Rs 1.95, or 1.95 percent and State Bank of India was quoting at Rs 443.60, down Rs 7.90, or 1.75 percent.
Market at 3 PM
Benchmark indices were trading near the day's low with Nifty below 15400.
The Sensex was down 957.08 points or 1.82% at 51584.31, and the Nifty was down 308.20 points or 1.96% at 15384. About 537 shares have advanced, 2626 shares declined, and 82 shares are unchanged.
Radhika Rao, Senior Economist | DBS Bank
Overnight rate action underscored US Fed’s keenness to bring forward policy adjustments and our inhouse call is for the policy rate to be at 3.5% by end of the year. An aggressive US hike cycle puts considerable pressure on the Asian central banks to follow suit, as their policy dashboard broadens from being focused on domestic growth and inflation path, to also include financial stability and outflow risks.
The need to anchor domestic inflationary expectations and to preserve financial market stability, are likely to nudge regional central banks to undertake timely and frontloaded action even if they don’t seek to match the quantum or pace of the US hike cycle.
Nifty Information Technology index shed 2.5 percent dragged by the Tech Mahindra, Mindtree, L&T Technology Services
Tapan Patel, Senior Analyst (Commodities), HDFC Securities
:
Crude oil prices traded higher with benchmark NYMEX WTI crude oil prices were trading 0.42% up near $115.80 per barrel. Crude oil prices recovered on Thursday from a steep drop in the previous session, supported by tight oil supply and peak summer consumption, after a U.S. rate hike sparked fears of slower economic growth and less fuel demand. The US crude production, which has been largely stagnant over the last few months, edged up 100,000 barrels per day last week to 12 million bpd, its highest level since April 2020.
We expect crude oil prices to trade sideways to down with resistance at $119 per barrel with support at $112 per barrel. MCX Crude oil July contract has important support at Rs. 8750 and resistance at Rs. 8980 per barrel.
Pranjal Kamra - CEO, Finology Venture on Federal Reserve's hike of interest rate
:
The Federal Reserve hiked the interest rate by 75 basis points, apparently the highest in some three decades. This didn’t come as a surprise if you look at the worsening inflationary pressure. While the rate hike could help; word has it, a ‘mild recession’ is on the cards. As all nations take cues from the US, these could replicate in India as well. On one hand, India is on a rate hike spree to curb inflation, that is at near-decadal-highs. On the other hand, the growth in consumer spending has slowed down this year, and further interest rate hikes could aggravate this problem. Moreover, higher interest rates in the US mean emerging markets like India become less lucrative for investments. Now, it has to be seen how the RBI strikes a balance between inflation control and economic/investment growth.
Chandan Taparia, Vice President, Equity Derivatives and Technical, Broking & Distribution, Motilal Oswal Financial Services
:
Nifty opened with a gap up but failed to hold at higher levels and drifted lower. On daily scale it has broken its important support zone of 15735 and is witnessing aggressive selling pressure. India VIX is up near 22 zones which indicates volatility likely to continue and it needs to cool down for stability in the market. Now as long as it is below 15500 zone we can expect lower levels of 15350 and 15000 whereas resistance is faced near to 15735 and 15888 zones. Market breadth is negative which indicates that the bears are dominating and facing resistance at higher levels.
Bank Nifty opened with a gap up in line with Nifty but couldn’t sustain at higher levels and drifted lower. It has breached the low of last 3 trading sessions and forming a bearish engulfing candle on the daily scale indicating aggressive selling pressure. Now as long as it holds below 32750 zones we can expect a move towards 32000 zones whereas resistance are placed at 33000 and 33500 zones.
Today, we are witnessing long built up in stocks like Maruti, ICICI Bank, UBL, Crompton and Deepak Nitarte etc. while short build-up is visible in counters like Coalindia, Navin fluorine, AuBank, Polycab, Ramcocem etc.
Nifty is expected to trade with negative bias and can utilise any bounce as a selling opportunity till it holds below 15735 zone. At current juncture, we are advising to be with selective stocks and one can look for selling opportunity in UltraTech, Voltas, JSW Steel, Laurus Labs etc.
Market update at 2 PM: Sensex is down 753.96 points or 1.43% at 51787.43, and the Nifty fell 241.10 points or 1.54% at 15451.10.
BSE Auto index slipped 1 percent dragged by Cummins India, Tata Motors, Hero MotoCorp
Madhavi Arora, Lead Economist | Emkay Global Financial Services
While we believe the money market may have largely baked it in, as we previously argued, the pain would likely linger for equities and credit markets. Our study also shows that historical precedent depicts how equities and credit struggle well after rates market peak.
Thus investors may brace ahead at best for occasional bear market rallies in coming months. 2023 will possibly, ironically, probably deliver recession but broadly positive returns across multiple asset classes, because 2022 will have front-loaded so much stagflation into valuations.
Nifty Metal index shed 4 percent dragged by the Vedanta, Welspun Corp, Jindal Steel:
Mohit Ralhan, Managing Partner at TIW Capital Group on US FED Reserve
The central banks across the globe are playing catch up with inflation and making efforts to race ahead of the curve. The 75-basis point increase by the Fed and more importantly the upward revision of 1.5% in the expected year-end rate indicates that the inflation is winning the battle as of now.
Fed also significantly cut its outlook for 2022 economic growth to 1.7% down from 2.8% in March. The risk of a recession in the USA has increased and the next two quarters will be extremely crucial.
Although Fed expects the inflation to move lower in 2023, the effect of the Fed’s actions on the broader economy remains uncertain. The markets are expected to remain quite volatile as it tries to find the balance between economic growth and high inflation.
Nifty touched its fresh 52-week low it down 254.80 points or 1.62% at 15437.40.
Over 150 stocks touched their 52-week low on the BSE. These included Wipro, UCO Bank, Tata Steel, RBL Bank, NBCC, Just Dial. Click Here to get a complete list of stocks that touched their 52 week lows during the day
UPL arm acquires Kudos Chemie for Rs 40 crore
UPL through its subsidiary USCL has acquired Kudos Chemie for Rs 40 crore, and to invest Rs 237 crore in Kudos over a period of 2 years as per resolution plan approved by NCLT.
Kudos manufactures speciality chemicals used as beverage and pharmaceutical ingredients and has manufacturing facility near Chandigarh.
UPL was quoting at Rs 693.70, down Rs 17.95, or 2.52 percent.
Market at 1 PM
Benchmark indices extended the losses and trading at day's low level.
The Sensex was down 499.15 points or 0.95% at 52042.24, and the Nifty was down 175.50 points or 1.12% at 15516.70. About 704 shares have advanced, 2360 shares declined, and 107 shares are unchanged.
Motilal Oswal View on ITC
While valuations of global Tobacco peers have been restored to their pre-pandemic levels (Jan'19), ITC still trades at a 27% discount to its Jan'19 valuations of 25.4x one-year forward EPS.
We value ITC at 21x FY24E EPS, representing a 65% premium to its global peer average.
We believe the premium multiples are justified, given its strong visibility over the medium-term and the defensive nature of its business, especially in a volatile macro environment.
We value the stock at 21x FY24E EPS. We arrive at a target price of Rs 335 per share and upgrade our rating to Buy.
Nifty Pharma index declined 1 percent dragged by the Granules India, Cipla, Glenmark Pharma
HDFC Mutual Fund acquires 50,000 shares in Voltamp Transformers
HDFC Mutual Fund through its several funds acquired 50,000 equity shares in Voltamp Transformers via open market transactions on June 14.
With this, its shareholding in the company increased to 5.25 percent, up from 4.91 percent earlier.
Voltamp Transformers touched a 52-week high of Rs 2,544.95 and was quoting at Rs 2,364.95, up Rs 1.70, or 0.07 percent.
Sensex breaches March intra-day low of 52,260.82. It is down 298.16 points or 0.57% at 52243.23.
Midcap Index is now down more than 20% from record high (all-time intraday high) of 33,243 hit in October 2021
Today’s Stock Market Action
Market at 12 PM
Benchmark indices extended the losses and trading at day's low with Nifty below 15600.
The Sensex was down 352.04 points or 0.67% at 52189.35, and the Nifty was down 121.70 points or 0.78% at 15570.50. About 956 shares have advanced, 2050 shares declined, and 118 shares are unchanged.
Supreme Court asked Haryana Discom to pay Rs 1,408 crore to Adani Power (Mundra) by June 28. Supreme Court issues notice to Uttar Haryana Bijli Vitran Nigam on Appeal by Adani Power (Mundra).
Gold Updates:
Gold prices inched lower on Thursday, as the dollar recovered slightly after a large but widely expected interest rate hike by the U.S. central bank sent the currency tumbling in the previous session.
Spot gold fell 0.1% to $1,831.29 per ounce, as of 0546 GMT, while U.S. gold futures rose 0.7% to $1,832.60.
Indian Overseas Bank to raise Rs 2,000 crore in FY23
Indian Overseas Bank has approved the capital plan for FY23. The bank will raise up to Rs 1,000 crore by issuing equity shares and another Rs 1,000 crore by issuing bonds, in FY23.
Gainers and Losers on the BSE Sensex in the early trade:
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services:
More than the 75bp hike in Fed funds rate, which was expected, it was the Fed chief comments and guidance that have calmed the markets, temporarily. Jay Powel's remark that "we have the tools and resolve to achieve price stability" reflects confidence in containing inflation.
His guidance of 3.4 percent rate by end of 2022 and 3.8 percent terminal rate in 2023 refect the determination to fight inflation. However, the presently unknown factor is whether the rising rates will tip the US economy into recession.
BSE realty index shed 1 percent dragged by the Phoenix Mills, Prestige Estates Projects, Macrotech Developers:
TCS partners with QIAGEN for cloud transformation strategy
Suman Bannerjee, CIO, Hedonova on Fed's interest rate hike
:
Given the quantum of money printed in the Covid era and high inflation, a 75 bp rate hike is not a surprise, it should have been a full 1%. The Fed is currently playing catchup. The economy has been flying high on stimulus money now it's time to take the punch bowl away. There is more than enough liquidity in the system to absorb a couple of hundred basis points in rate hikes. A high inflationary environment for an extended time will have severe negative effects on global trade too.
