Closing Bell: Sensex, Nifty end lower amid volatility; IT, metals shine

Taking Stock: Sensex, Nifty end marginally lower amid volatility; realty worst hit

A mixed trend was witnessed on the sectoral front with the Realty index falling nearly 2 percent and the PSU Bank index down 0.5 percent. The Information Technology index rose 1 percent and the Metal index added 0.75 percent.... Read More

Nifty closed marginally in the negative on Aug 01, pulled down by profit taking in the results season. At close, Nifty was down 0.10% or 20.3 points at 19733.6. Smallcap index ended in the positive even as the advance decline ratio remained high at 1.63:1.

The Indian government's Goods and Services Tax (GST) collections climbed 10.8 percent on-year in July to Rs 1.65 lakh crore. At Rs 1.65 lakh crore, the July GST collections is the third-highest of all time and is 2.2 percent higher than what was collected in June. This is the fifth month in a row that the monthly GST collection has come in above the Rs 1.5-lakh-crore mark.

India's manufacturing activity maintained its growth momentum as order growth remained elevated in July amid ongoing buoyant demand. The India Manufacturing Purchasing Managers’ Index came in at 57.7 in July compared to 57.8 in June, according to IHS Markit.

Asian stocks ended mixed on Tuesday as investors began to find more cause for cheer over global economic prospects than reasons to worry, even as data showed risks remain. European markets were lower on Tuesday as investors digested a busy week of earnings and weak Euro zone manufacturing activity in July that fell at the fastest pace since the start of the start of the Covid-19 pandemic. HCOB’s final euro zone manufacturing Purchasing Managers’ Index fell to 42.7 in July from June’s 43.4, its lowest level since May 2020.

Nifty corrected minorly on Aug 01. However, the recent minor uptrend does not seem to be under threat. 19867 – 19646 could be the band for the Nifty in the near term.

The high beta index experienced a lackluster session. While prices began with a slight positive trend, the absence of follow-up buying led to a gradual decline in the first half. Subsequently, there was a slight improvement during the second half, but prices eventually closed with a minor loss of 0.13%, just below 45600.

The banking index underwent its third consecutive consolidation session. Prices managed to hold on to the key support of 20EMA, but the expected upward momentum from this support is still missing. As mentioned in the previous outlook, it appears that the market is awaiting a trigger, possibly traders are opting to keep positions light in anticipation of the key RBI policy announcement next week. In such a scenario, we should monitor key support levels at 45300 – 45200, while immediate resistance lies at 46000 – 46300. Price movements are expected to remain within this range, and any significant move in any direction will only occur upon breaking out of these specified levels.

It was an uninspiring session for the bulls as the benchmarks struggled for direction in a choppy session. Risk aversion was the preferred theme. Despite the range-bound session, India's economic readings remained buoyant as GST collections for the month of July rose 11% year on year to Rs 1.65 trillion. Technically speaking, Nifty’s technical landscape is now suggesting a desired consolidation with interweek support at 19561 mark, while immediate hurdles are placed at 19877 mark.

The Nifty opened on a positive note however it faced resistance at the upper end of the falling channel. It closed in the negative, down ~20 points. On the daily charts, we can observe that the Nifty witnessed a bounce back from the 19600 levels where the 20-day moving average is placed. The bounce is likely to fizzle out as there is an absence of support from the momentum indicator. Considering that the Nifty has closed in the negative today we need to complete a leg, and the rise on the hourly charts appears overlapping, indicating it is not the start of a new leg of up-move. The daily and hourly momentum indicators provide divergent signals which also suggest an absence of trending moves. Considering all the above parameters we shall continue to maintain that Nifty is likely to remain range bound between 19500 – 20000. Crucial support levels to keep handy are 19630 - 19600 and on the upside, 19800 - 19860 is the immediate hurdle zone.

Bank Nifty also closed in the red today. It managed to retrace only 50% of the previous fall from 46310 – 45238 and again faced selling pressure. Considering that the hourly momentum indicator has reached the equilibrium line. We expect that the pullback has matured and is ready for the next leg of the down-move. We expect the Bank Nifty to drift lower to 45000 over the next few trading sessions

Markets traded range bound and ended almost unchanged amid mixed cues. Initially, Nifty tried to inch higher in continuation to Monday’s up move but profit taking in select heavyweights capped the upside. It oscillated in a narrow range thereafter and finally settled at 19734.30 levels. In line with the benchmark, the majority of sectors ended flat however continued recovery in IT majors saved the day.

Among the broader indices, the smallcap index inched higher and gained over half a percent while the midcap ended flat.

Markets have been maintaining a positive tone amid consolidation, thanks to upbeat global cues and selective buying across sectors. The existence of multiple supports at 19,500 in Nifty is further adding to the confirmation. We thus reiterate our view to look for buying opportunities on dips and avoid contrarian trades.

There was caution amongst the investors as markets exhibited a range-bound trend and ended marginally lower ahead of the RBI's monetary policy next week. Markets would continue to look for global cues, as the recent rally was too fast paced with valuations getting expensive. Markets will continue to select bouts of profit-taking even as the overall undertone remains bullish.

Technically, on the daily chart, the index has formed a small bearish candle, which indicates indecisiveness between the bulls and bears. Below 19700, the market could retest the level of 19650-19600. On the flip side, a fresh uptrend rally is possible only after the dismissal of 19800 and above the same, the index could rally till 19840-19875.

Throughout the day, the markets remained in a well-defined range and finally ended the day at 19,733.55 with a loss of 20.25 points. The Realty sector was the major laggard by ending the day with a loss of 1.77% followed by the PSU Banking sector while a strong reversal was spotted in the Tech sector. Mixed activity was seen in the Auto, Metal, and Pharma sector. Mid and Smallcap indices extended their streak of outperformance. On the daily chart, Nifty50 has made a small negative candle at the higher end of the bullish Flag pattern, a breakout is a must to start another round of rally.

The domestic indices traded with a negative bias below the flattish trend, impacted by global peers. Despite this, mid- and small-cap stocks continued to outperform the benchmark index. IT stocks rallied on hopes of a soft landing for the US economy. India's manufacturing activity remained robust, although marginally it moderated for the second consecutive month in July. The market direction in the upcoming days will be influenced by key data points, including auto sales figures, US PMI, and US job data.

Indian rupee ended flat at 82.26.

Benchmark indices ended with marginal losses in the volatile session on August 1.

Production up 19% at 2.44 million tonne versus 2.05 million tonne and sales up 2.7% at 3.03 million tonne versus 2.95 million tonne, YoY.