Closing Bell: Nifty end below 17,900, Sensex falls 109 pts; PSU bank, realty gain, metals drag

Taking Stock: Market Ends Lower Amid Volatility, Metals Fail To Shine On Dhanteras

Except auto and bank, all sectoral indices ended in the red. The Nifty metal index closing 1.5 percent lower.... Read More

Indians' love for gold knows no bounds, it is the second-largest consumer of gold. In the run-up to the festive and marriage season coupled with unlocking across India, the demand for gold is likely to pick up, helping the price. Gold is seen as a serious investment and asset class by Indian households.

After posting stellar gains for the past few years, the yellow metal has been trading range-bound in the past 12 months. Gold outperformed as an asset class in 2020 but lost its sheen as economies across the globe emerged out of the shadows of COVID19. Gold prices are still far away from their all-time high witnessed in August 2020.

Concerns of tapering, strengthening US Dollar, and high rate of vaccination have dampened prospects for gold. Going forward, the actions by the global central banks mainly the US Fed on the liquidity tightening will guide gold prices.

The Nifty was unable to maintain a close above 17900 - this is a crucial point as the markets can either rally up or break down from this level.

Hence it is advisable to watch the index closely for a couple of sessions before taking a directional call. The markets can give a 300-400 points move in either direction.

Investors are trading cautiously ahead of Diwali festival and have booked profit in select counters that have run-up sharply in the recent upsurge. After a firm opening, Nifty failed to clear the crucial 18000 resistance level. Although the intraday texture is still positive, the key concern is that the Nifty has been consistently facing resistance near the 20 day SMA or 18000 level.

For traders, 18000 and 18050 could act as an important breakout level. We are of the view that ahead of the weekly expiry, the index is likely to consolidate in the range of 17800 to 18050 levels.

For Nifty, the intraday support has been placed at 17850-17800, whereas 20 day SMA or 18050 would act as a key resistance level. On the other side, the dismissal of 17800 could possibly trigger another correction wave up to 17725.

The Nifty in the last session had broken out from a base triangle on the hourly chart & witnessed recovery. The index attempted to continue with the recovery today however stumbled near the junction of the 40 hour exponential moving average & the hourly upper Bollinger Band.

In terms of the level, the 18000 mark acted as a key barrier. Though that level was crossed on an intraday basis, the index couldn’t sustain in the higher territory & closed below it.

If the bulls manage to cross that hurdle on a closing basis then the short term range will shift higher. On the flip side, failure to cross that level will keep the short term consolidation confined within the range of 17600-18000.

After a positive opening, the index made an intraday high at 18012.25 level and traded in a narrow range throughout the session and managed to close the session at 17888.95 with moderate loss of 40.70 points.

On the technical front, the index has taken resistance from 21 DMA and showed correction, crossing above the same can show further upside movement.

On the intraday hourly chart, the index has been trading with lower high & lower low, which indicates weakness for the upcoming session.

However, an hourly momentum indicator MACD is trading with a positive crossover which suggests bullish movement is intact. At present, the Nifty has immediate support at 17,700, while resistance comes at 18,030 levels, crossing above the same can show 18,100-18,200 levels.

Index opened a day with a gap but witnessed some profit booking and closed a day at 17889 with mild loss & formed a bearish candle on the daily chart.

Index has formed a good support zone around 17850-17780 zone & holding above said levels we may see index to trade with positive bias.

Also existing longs can be hold with keeping stop out level below 17750 zone on closing basis, immediate & strong hurdle is formed near 17950-1800 mark.

Until we don’t cross above 18k mark we may not see aggressive buying in the markets.

Succumbing to lacklustre global sentiments, domestic indices failed to gain ground oscillating between gains and losses in today’s rough session. Global markets remain jittery ahead of the upcoming Bank of England and Fed meetings where the central banks could cease the pandemic-era stimulus.

Metal, oil and commodity stocks dragged, fuelled by profit booking while realty, PSU bank and consumer durables made frail attempts at lifting the indices.

Auto sector managed to remain buoyant despite weak auto sales numbers reported by sectoral majors due to supply chain disruptions, fuel price hikes and rise in input costs.

The market witnessed some lackluster movement. Our research suggests, a significant breakout above the levels of 18000 could result in improvement of market breadth and market can rally till the levels of 18250.

We retain our cautious stance and advise the traders to refrain from building a fresh buying position, until we see further improvement and market sustain above 18000.

Benchmark indices ended lower in the volatile session on November 2 amid mixed global cues.

At close, the Sensex was down 109.40 points or 0.18% at 60,029.06, and the Nifty was down 40.70 points or 0.23% at 17,889.00. About 1851 shares have advanced, 1216 shares declined, and 107 shares are unchanged.

Maruti Suzuki, NTPC, Titan Company, SBI and L&T were among the major Nifty gainers. Losers included Tata Steel, Grasim Industries, Tech Mahindra, JSW Steel and Hindalco Industries.

Among sectors, metal index shed over 1 percent, while realty and PSU Bank index up 2-3 percent. BSE midcap and smallcap indices rose 0.5-1 percent.

The FOMC Monetary Policy is set to be released on 3rd Nov 11:30 pm where the central bank is widely expected to announce that it will begin to unwind its USD 120 billion in monthly bond purchases and end the program entirely by the middle of next year.

The quantum of monthly bond purchases is expected to be at a rate of USD 15 billion a month amid a recovery in the U.S. labor market and worries over the inflation outlook.

Fed Chairman Jerome Powell’s comments will be closely watched for any adjustment in his thinking on inflation which shall drive interest rate expectations.

Worries over inflation have prompted traders to bring forward their expectations around the timing and pace of the Fed interest rate increases. Apparently, traders are pricing in as many as three interest rate hikes next year, but in the latest Fed forecast, only half of central bank officials agreed there should be even one.

In line with its plan to double its capacity in 6-7 years, Shree cement has announced 6.5MTPA (7.5-8 mtpa clinker) expansion across East and North. It has recently announced 3.3-4 mtpa of clinker expansion in the East followed by grinding capacity in West Bengal (3MTPA).

In addition to that, it announced an integrated expansion project in Gothra, Rajasthan (3.5mtpa backed by 3.8MTPA clinker).

We believe the company will continue to enjoy premium valuation compared to its peers due to its cash positive balance sheet, efficient operation, and aggressive growth plan.

We value the stock at ~20x on its FY23E EV/EBITDA, which yields a target price of Rs 30,602. We maintain our accumulate rating on the stock with a revised target price of Rs 30,602 (Rs 30,321 earlier), which gives an upside potential of 5%.