Closing Bell: Nifty ends below 16,500, Sensex falls 866 pts; power stocks gain, realty worst hit

Markets resumed the corrective trend and lost nearly one and a half percent. Weak global cues triggered a gap down start, followed by range bound session till the end.

The Nifty index finally ended with losses of 1.5% to close at 16,411 levels. Amongst the sectors, except Power, all the other indices ended with losses wherein Realty, Metal and Consumer Durables ended were the top losers. The broader indices also lost in the range of 1.5%-2%.

Markets will react to Reliance numbers in early trade on Monday and then focus would shift to the global cues. The increasing fear of aggressive rate hikes from the US Fed has spooked investors across the globe including India.

On the index front, the Nifty has tested the crucial support zone of 16,400 and indications are in the favour of prevailing decline to continue with some intermediate pause/rebound.

In case of any rebound, the 16650-16800 zone would act as a hurdle. Participants should align their positions accordingly and use rebound to create shorts.

The weakness in the Bank Nifty index continued with a gap-down opening. The index today formed a Doji candle which indicates indecisiveness at the current levels.

The upside resistance stands at 35200 levels and downside support is visible at 34000 levels. A breach on either side will result in trending action.

Markets were in southward direction right from the start of the trading session and selling intensified thereafter as rising crude oil prices reignited fears that inflation would pose a major challenge going ahead.

The market is in a dilemma that in a rising interest rate scenario, a more hawkish stance by the RBI going ahead could hurt growth. Technically, the Nifty is consistently trading below 200-day and 50-day SMA which is broadly negative.

In addition, on weekly charts it has formed a long bearish candle, which supports further weakness from the current levels. On intraday charts the index is consistently holding a lower top formation that also supports short term weakness.

For the traders, 16300 would be the key support level. However, a quick intraday pullback rally is not ruled out if the index succeeds to trade above 16300. Above the same, the pullback rally could continue up to 16550-16700. Below 16300, selling pressure is likely to intensify, and below the same the Nifty could touch the level of 16150-16000.

A steep crash in the US stocks as the market evaluated the need for a higher rate hike to tame elevated inflation levels wounded global markets with heavy selling.

The Bank of England while raising its interest rates, warned about a possible risk of recession, aggravating investor fears.

This period of volatility is the time for smart money to look for opportunities with buy-in-dip as the strategy with a focus on sectors that are expected to be least impacted by inflation & yield rise.

Rupee fell to the lowest level since March 2022 as the broad strength in the dollar continued to weigh on major crosses. Earlier in the week rupee rose after RBI decided to raise rates by 40bps and hiked CRR by 50bps. But losses for the currency was restricted after Federal Reserve too raised rates and maintained a hawkish stance.

Yesterday, major trigger came in from the Bank of England that raised interest rate by 25bps and raised concern over inflation. Today focus will be on the non farm payrolls number and disappointing number could keep the dollar weighed down.

We expect the USDINR (Spot) to trade with sideways with a positive bias and quote in the range of 76.40 and 77.20.

Indian rupee ended 65 paise lower at 76.91 per dollar against previous close of 76.26.

Benchmark indices fell 1.5 percent on May 6 with Nifty closing below 16,500 on worries over interest rate hikes.

At close, the Sensex was down 866.65 points or 1.56% at 54,835.58, and the Nifty was down 271.40 points or 1.63% at 16,411.30. About 837 shares have advanced, 2444 shares declined, and 105 shares are unchanged.

Divis Labs, Bajaj Finance, Shree Cements, UPL and Tata Motors were among the top Nifty losers, while gainers were Hero MotoCorp, Tech Mahindra, Power Grid Corp, ITC and ONGC.

Among sectors, metal and realty indices fell 3 percent each and IT index down 2 percent, however, power index rose 0.5 percent.

BSE midcap and smallcap indices fell 2 percent each.

Brokerage house Jefferies has kept a buy rating on TVS Motor Company and raised the target price to Rs 800 per share.The Q4 volumes fell 8% YoY, but EBITDA grew 4% & was 10% above our estimates, said Jefferries.

The EBITDA margin & EBITDA/vehicle were flattish QoQ, sustaining near all-time highs. Its exports are holding up well, and expect 2-wheeler demand in India to pick up.

TVS has been gaining share across scooters, premium bikes & exports. The company is turning aggressive on EVs, expanding portfolio & capacity, reported CNBC-TV18.

TVS reported an EBITDA margin at 10.1% (PLe: 10.3%; flat YoY) despite commodity cost pressures, supported by price hikes (~1.5% QoQ) and higher exports (37% of total volumes vs 34% QoQ). Management highlighted a strong product pipeline over FY23 for ICE and EV models (one new EV model launched in 1QFY23).

Management remains confident of growing ahead of the market in FY23 driven by a comeback of rural demand supported by monsoons, strong reception of new models and export momentum.

We believe TVS will be able to sustain growth momentum driven by (1) new product launches in ICE & EV segments along with its revamped product portfolio (2) strong exports and (iii) margin protection through cost reduction efforts and price hikes.

We expand our EBITDA margin estimates by ~50/70bps to factor in margin protection through price hikes and cost controls. Maintain ‘BUY’ rating with revised target price of Rs 795 at 23x on FY24E EPS and Rs 34 for TVS Credit.

SJVN has bagged its first ever 30 MW Wind-Solar Hybrid project through a tender floated by Solar Energy Corporation of India Limited (SECT). The project was bagged at Rs 2.54/Unit on Build, Own and Operate basis in the Tariff based competitive bidding process.

The tentative cost for Construction and Development of project is Rs 195 crores and the project is expected to generate 79 MU’s in the 1st year and on cumulative basis approximately 1860 MU’s would be generated over a period of 25 years.

The Power Purchase Agreement (PPA) shall be signed between the Company and SECI for 25 years.

The Project shall be commissioned within a period of 18 months from the date of signing of PPA.

SJVN was quoting at Rs 28.40, up Rs 0.40, or 1.43 percent on the BSE.