Closing Bell: Nifty above 19,500, Sensex gains 481 pts; IT, pharma gain, autos slip

Taking Stock: Market breaks 3-day fall with Nifty above 19,500; Sensex jumps 481 points

For the week, BSE Sensex and Nifty50 lost 0.6 percent each.... Read More

Nifty snapped a three-day losing streak on August 04. At close, Nifty was up 0.70 or 135.4 points at 19517. Broad market indices rose in tandem with the Nifty even as the advance decline ratio remained firm at 1.90:1.

Global stock markets steadied on Friday before a U.S. non-farm payrolls report that could influence interest rate plans. German factory orders unexpectedly rebounded in June driven by foreign demand, while France's industrial production declined 0.9 percent in June, following a revised 1.1 percent growth in May, separate reports showed.

Nifty bounced little on Aug 04 on expected lines. It is in the process of a small pullback. On weekly basis, the Nifty has fallen 0.66% and the large upper and lower shadows on the weekly candlestick denotes the tug of war between bulls and bears. On a near term basis, the Nifty could stay in the 19655-19296 band while on a short term basis, it could stay in the 19796 - 19201 band.

SBI has been consistently under pressure since it halted its rise around Rs 620 levels which was near previous swing high resistance formed in December 2022. The stock has given a breakdown from ascending trendline patterns on the daily charts with highest volumes in the last 3 months. The stock has also seen a bearish macd crossover on the daily charts which can keep the stock under pressure. Investors are advised to keep 552 as strict stoploss for their existing positions. This is a crucial level as SBI has been in an uptrend so far and breaking Rs 552 will trigger a trend reversal.

Q1 earnings, FII action, and agencies' outlook keep Dalal Street busy this week. After three consecutive days of decline, the benchmark indices rebounded today, closing higher. The Sensex surged 480.57 points or 0.74 percent to reach 65,721.25, while the Nifty climbed 135.30 points or 0.70 percent, ending at 19,517.

Despite this, the IT and Pharma sectors stood out as outperformers, ending the week on a positive note. Technically, Nifty 50 dipped below its 20-day moving average on the daily candle, a rare occurrence in recent months.

Furthermore, foreign investors have been experiencing an outflow of funds, possibly interpreted as profit booking, leading to a slowdown in their buying activity. However, given Morgan Stanley's optimistic outlook on the Indian economy, it is expected to bolster foreign capital inflow soon.

The market had been falling for three consecutive sessions and a relief rally was already expected, which came in on the back of a rating upgrade by Morgan Stanley as India remains a bright spot in an otherwise tepid world economy. Fitch Ratings' move to downgrade US government credit had triggered a global market sell-off in the last few sessions, but India's buoyant economic show in the last few quarters means investors cannot ignore domestic equity markets for long and would keep coming after every short-term correction.

Technically, we could see promising pullback rallies if Nifty trades above 19400 and on further upsurge, it could move up till 19600 or 20 day SMA. Further upside could lift the market till 19700. On the flip side, below 19400 the selling pressure is likely to accelerate. Below which, the index could slip till 19300-19250.

After a sharp correction, the Bank Nifty took support near the 50 day SMA and bounced back sharply. For traders, the 50-day SMA or 44500 would be the sacrosanct support level. Above which, it could rally till 20-day SMA or 45400-45500. On the flip side, below 44500, the uptrend would be vulnerable and below the same, it could retest the level of 44300-44000.

The Nifty opened on a positive note and consolidated thereafter for the most part of the day to close with gains of around ~130 points. After the sharp selling during the week the Nifty did manage to reverse some of the losses on the last trading session of the week. Though, on a weekly basis, it has closed in the red down for the second consecutive week. The pullback is likely to fizzle out in the zone 19560 – 19600 where resistance in the form of the 40-hour moving average and the hourly upper Bollinger band is placed. Thus, this bounce should be sold into. The hourly momentum indicator has also reached the equilibrium line indicating that the pullback has matured and can begin a new cycle on the downside. Overall, the trend is still negative, and we expect levels of 19100 from a short-term perspective.

Bank Nifty has also witnessed a pullback however it is unlikely to result in a larger trend reversal. The pullback is likely to fizzle out in the range 45100 – 45200 where resistance in the form of the 40-hour moving average and the hourly upper Bollinger band is placed. The hourly momentum indicator has witnessed a pullback to the equilibrium line indicating that the pullback has matured and can start a new cycle. Overall, the trend is still negative and we expect it to drift lower to 44000 in the short term.

Positive earnings reports provided a much-needed boost to the domestic market, aiding its recovery from the impact of weak global cues. The pharma sector sustained its positive momentum, with the trend being extended by the IT and banking stocks. However, increasing US bond yields continued to distract the global market, impeding the inflow of foreign funds into the domestic market.

Markets witnessed respite after the recent fall and gained over half a percent. After the gap-up start, Nifty hovered in a band throughout the session and finally settled at 19,518 levels. Meanwhile, a mixed trend on the sectoral front kept the traders busy wherein IT, pharma and banking posted decent gains. The broader indices too participated in the move and gained nearly a percent each.

Nifty has rebounded after testing the support at 19,300 but failed to reclaim the short-term moving average i.e. 20 EMA. We need sustainability above the same for further recovery else the decline would resume. Though we are seeing a dip in the global indices too, their trend hasn’t reversed yet, which is offering some comfort. Amid mixed signals, we advise staying selective and keeping a check on position size.

Indian rupee settled for its weakest weekly close of the current calendar year following haven dollar demand and higher crude oil prices. In the week gone, foreign institutions were net sellers of $273 million in domestic equities while the rupee fell nearly 0.7%.

All eyes will be on next week’s RBI monetary policy after the recent surge in food prices. Traders are pricing in no change on Aug.10 meeting.

From the technical front, the trend for spot USDINR remains bullish with higher side resistance at 83.30 and support at 82.60.

Indian rupee ended 11 paise lower at 82.84 per dollar on Friday against Thursday's close of 82.73.

Benchmark indices ended higher on August 4 with Nifty above 19,500.

At close, the Sensex was up 480.57 points or 0.74 percent at 65,721.25, and the Nifty was up 135.30 points or 0.70 percent at 19,517. About 2177 shares advanced, 1296 shares declined, and 139 shares unchanged.

Biggest gainers on the Nifty were Cipla, IndusInd Bank, Tech Mahindra, Wipro and Bharti Airtel, while losers were SBI, Bajaj Auto, BPCL, NTPC and Maruti Suzuki.

On the sectoral front, Pharma and Information Technology index up 1 percent each, and bank, capital goods and metal added 0.5 percent each. However, selling was seen in the auto and power names.

BSE midcap and smallcap indices added 0.6 percent each.

-Neutral call, target Rs 510 per share
-Muted start to FY24
-Results were below estimate on lower-than-anticipated volume & margin
-Propane likely to be at a premium to natural gas prices from September onwards
-Trades at 18x FY25F P/E

Net profit was up 21.3% at Rs 347 crore versus Rs 286 crore and revenue up 5.1% at Rs 4,310 versus Rs 4,102 crore, YoY.