Closing Bell: Nifty ends below 18,150, Sensex down 129 points; banks outperform

Taking Stock: Market ends lower for the third day; Sensex down 129 points, Nifty below 18,150

Divis Laboratories, Adani Ports, SBI, ITC and Titan Company were among the biggest losers on the Nifty. Bajaj Finance, Kotak Mahindra Bank, Bharti Airtel, ICICI Bank and Asian Paints were the biggest gainers... Read More

Nifty had a strong start to the trading session aided by buoyant US indices which closed over a percent higher. However, Nifty continued to struggle as the day progressed and broke the previous day low towards the end of trading session. With this, the benchmark index has closed below its 10DEMA for the second consecutive day implying the pressure can increase which can push the index towards 18,000 levels.

Bank Nifty was seen outperforming Nifty throughout the day and remained quite strong for a major part of the trading session. The index became vulnerable once SBI announced its quarterly numbers which augmented the pressure. However, Bank Nifty continues to trade above its 10DEMA implying fresh downside is expected to be seen once it closes below 43,500 levels. Till then it is expected to trade in the 43,500-44,100 range.

The Nifty opened gap up however it was unable to sustain at higher level and closed in the negative down ~50 points. On the hourly charts we can observe that the Nifty has faced resistance around the key hourly moving averages and faced selling pressure. Going ahead 18,300 – 18,350 shall act as a stiff resistance. On the way down the Nifty is approaching the crucial support of 18,079 which coincides with the 20-day moving average and below that lies the psychological support level of 18,000.

So on the downside there are multiple support parameters which shall provide cushion and restrict a deep correction. Stock specific action can take place over the next few trading sessions. The daily momentum indicator has a negative crossover which is a sell signal. Thus, considering the above we have changed our outlook to sideways and the range of consolidation is 18,400 – 18,000.

Domestic markets underperformed Asian peers as profit-taking entered for the third straight session, with investors maintaining risk-on sentiment in the wake of a sharp spike in valuation following the recent upsurge. Bearishness is also seen due to caution over the US debt-ceiling deal and signs of slowing demand in China.

Technically, the Nifty has formed a lower top formation on intraday charts and has also formed a bearish candle on daily charts which is broadly negative.

The market texture is weak and the 20 day SMA (Simple Moving Average) or 18,050 would be the immediate support zone for the bulls. On the other hand, 18,200 could act as an immediate resistance zone for the traders, above which the index could retest the level of 18,280-18,300.

Indian rupee closed 20 paise lower at 82.59 per dollar on Wednesday versus previous close of 82.39.

Benchmark indices ended lower for the third straight session on May 18 with Nifty below 18,150.

At close, the Sensex was down 128.90 points or 0.21 percentat 61,431.74, and the Nifty was down 51.80 points or 0.28percentat 18,130. About 1,530 shares advanced, 1,846 declined, and 124 were unchanged.

Top losers on the Nifty included Divis Laboratories, Adani Ports, SBI, ITC and Titan Company. However, gainers were Bajaj Finance, Kotak Mahindra Bank, Bharti Airtel, ICICI Bank and Asian Paints.

Except for bank, all other sectoral indices ended in the red with realty, oil & gas, PSU Bank, power, pharma, FMCG, and capital goods down 1-2 percent each.

The BSE midcap index shed 0.67 percent and smallcap index declined 0.26 percent.

Indian Rupee depreciated today as US Dollar rose to a seven-week high amid optimism over debt ceiling talks. Overnight gains in crude oil prices also weighed on the domestic currency. However, positive domestic equities cushioned the downside. US Dollar gained on optimism as US President Joe Biden and House Speaker Kevin McCarthy are working to reach a deal to avoid a default. Upbeat housing starts data from US also supported the US Dollar.

We expect Rupee to trade with a negative bias on underlying strength in the US Dollar. However, improved global risk sentiments on optimism that debt ceiling talks will get resolved may support Rupee at lower levels. FII inflows may also support Rupee. Traders may remain cautious ahead of weekly unemployment claims and existing home sales data from US. Traders may also watch out for speeches from various Federal Reserve officials. We expect USDINR spot to trade in between 82.30 to 83 in the near term.

Crude oil prices traded down on Thursday with benchmark NYMEX WTI crude oil treading down by 0.33percentat $72.58 per barrel. Crude oil prices retreated in today’s session after price surged more than 2.0percentin the previous session as optimism the US would resolve its debt-ceiling impasse triggered broad gains in financial markets, offsetting a largely bearish US oil inventory report.

We expect the crude oil price bullish momentum will likely continue after a minor correction in price. NYMEX WTI Crude oil has resistances at $73.80/$75.00 per barrel and supports at $70.80/$69.00 per barrel for the day. MCX Crude oil June future has supports 5920/5870 levels and resistances at 6100/6180 levels.

The company has recorded a net profit of Rs 50 crore in the quarter ended March 2023 against losses of Rs 2.2 crore in the same quarter last fiscal.

Revenue of the company was up 35.3percentat Rs 258.5 crore versus Rs 191.1 crore, YoY.

Orient Paper and Industries touched a 52-week high of Rs 47.64 and quoted at Rs 45.85, up Rs 0.40, or 0.88 percent on the BSE.