Closing Bell: Nifty below 18,700, Sensex falls 311 pts; banks drag, pharma gains

Taking Stock: Market snaps 3-day gaining streak; Sensex down 300 points, Nifty gives up 18,700

Globally, equity markets globally were spooked after the US Federal Reserve hinted at two more rate hikes despite hitting the pause button in the June meeting... Read More

Nifty snapped its winning streak due to profit booking and cautious investor sentiment, despite the Federal Reserve keeping rates unchanged. Skymet Weather's negative monsoon outlook added to the market's concerns.

Bank Nifty dropped 1.24%, led by declines in ICICI Bank, HDFC Bank, Kotak Bank, and SBI. Eyes are now on the ECB policy announcements. Nifty's upside momentum appears to struggle, with key support at 18,551 and major hurdles at its all-time high of 18,888.

The Nifty opened on a positive note however as the day progressed selling pressure intensified and the Nifty closed in the negative down ~68 points. On the daily charts the Nifty has formed an Engulfing Bear candle stick pattern which has bearish implications. The daily momentum indicator has a negative crossover which is a sell signal. thus, both price and momentum indicator is suggesting weakness in the near term and thus we change our short term outlook on the index to sideways from positive.

The range of consolidation is likely to be 18800 – 18500. The 20-day moving average which has been holding out during this rally is placed at 18532 and so only a decisive break below that shall reverse the trend. In terms of levels, 18780 – 18800 shall act as an immediate hurdle zone while 18530 – 18500 is the crucial support zone to watch out for.

As far as Bank Nifty is concerned, the index has decisively broken the consolidation range of 44000 – 44500 on the downside and is likely to head lower over the next few trading sessions. In terms of price pattern, the Bank Nifty has formed a Distribution triangle pattern which has been breached on the downside. On the downside we expect the Bank Nifty to target levels of 43000

The domestic market is responding to the Fed's hawkish commentary, which suggests the possibility of 2 more rate hikes in the future this year, although they have currently opted for a halt.

Due to concerns about inflation persisting above their target range, Fed officials have increased their rate projections by 47.5bps for the end of 2023 to 5.6%. Despite weakness in the benchmark index, there is buying interest observed with the Nifty Mid-cap index trading at an all-time high.

Correction came into play after 3-session gains and Sensex closed below the 63k-mark, as a hawkish comment by the US Federal Reserve indicating the possibility of two more rate hikes fuelled pessimism in the markets. After a rate hike pause, investors were expecting a more dovish stance but the Fed's comments on interest rates left the markets disappointed.

Technically, a double top formation on intraday charts and a bearish candle on daily charts is indicating temporary weakness in the markets. As long as the Nifty is trading below 18765, the weak sentiment is likely to continue. Below the same, the index could slip till 18600-18550. However, a fresh uptrend could be seen only after the dismissal of 18765 and could move up to 18825-18875.

Indian rupee closed lower at 82.18 per dollar against previous close of 82.10.

benchmark indices snapped three-day winning streak and ended lower with Nifty below 18,700.

At close, the Sensex was down 310.88 points or 0.49 percentat 62,917.63, and the Nifty was down 67.80 points or 0.36percent at 18,688.10. About 1,684 shares advanced, 1,754 shares declined, and 133 shares were unchanged.

Top losers on the Nifty were Hero MotoCorp, Wipro, IndusInd Bank, SBI and Kotak Mahindra Bank, while gainers were Apollo Hospitals, Divis Laboratories, Dr Reddy's Laboratories, Cipla and BPCL.

Among sectors, the bank index was down 1 percent, the realty index fell nearly 1 percent, the Information Technology index shed 0.5 percent, while the pharma index rose 1 percent and the FMCG index added 0.5 percent.

The BSE midcap index rose 0.3 percent, while smallcap index ended flat.

The United States Food and Drug Administration (US FDA) conducted a Pre-Approval Inspection (PAI) and Good Manufacturing Practice (GMP) at the Bliss GVS Pharma's manufacturing unit at Plot No. 11, Survey No. 38/1, Dewan Udyog Nagar, Aliyali Village, Palghar, 401404, Maharashtra from Monday, March 13, 2023, to Friday, March 17, 2023.

The company has now received the Establishment Inspection Report (EIR) indicating closure of the inspection through which the US FDA agency assigned the inspection classification of the facility as “Voluntary Action Indicated (VAI)”.

REC board members will meet on June 24 to consider the final dividend, if any, for FY23.

REC was quoting at Rs 151.70, down Rs 2.00, or 1.30 percent.

KRBLhas commenced commercial production at its new plant atAnjar, in Gujarat.

KRBLwas quoting at Rs 357.90, up Rs 5.25, or 1.49 percent.

Expect

Indian Rupee depreciated slightly on recovery in US Dollar and weak domestic markets. However, FII inflows and weak crude oil prices supported Rupee at lower levels. There are reports of some corporate Dollar inflows which is also providing support to the domestic currency. US Dollar recovered today on hawkish guidance by US Federal Reserve. It forecast terminal rates at 5.6-5.75% range, higher than 5.1-5.25% range earlier, indicating another 50 bps rate hike on the cards in 2023. FOMC paused rate hike in its June FOMC yesterday and kept the interest rates unchanged at 5-5.25% range.

We expect Rupee to trade with a slight negative bias on positive tone in US Dollar and weak domestic markets. However, weak tone in crude oil prices and foreign inflows may support Rupee at lower levels. Traders may remain cautious ahead of India’s trade balance data today. Market participants may also remain cautious ahead of retail sales, weekly unemployment claims, industrial production and Empire State manufacturing index data from US. We expect USDINR spot to trade in between 81.70 to 82.50 in the near term.