Closing Bell: Sensex falls 505 pts, Nifty below 19,350; auto, PSU banks outperform

Taking Stock: Catching breath? Sensex down 505 points, Nifty below 19,350

Except auto and PSU bank, all sectoral indices ended in the red, with FMCG, power and realty down a percent each... Read More

Nifty Broke the 8 sessions winning streak by falling 0.85% to close at 19331.80. Both Nifty and Bank Nifty breached 5 days EMA support in today’s session.

Nifty Midcap 100 and Nifty Small cap 100 Index corrected along with the Benchmark Indices today where fell by 0.81% and 0.44%. Advancing shares outnumbered the declining shares where advance decline ratio stood at 0.77 on BSE, lowest since 23-June.

NSE Cash market volumes were higher as compared to last ten-day average. Amongst the sectoral Indices, Nifty FMCG, Realty and Private bank fell the most while Nifty Media, PSU Banks and Auto gained the most.

FMCG shares witnessed selling pressure for two trading sessions. Consumer durable stocks witnessed buying demand for fourth consecutive sessions.

In the foreign exchange market, the rupee edged lower against the dollar.

Going forward 19500 has become strong resistance for Nifty and unless that is taken out, traders should remain cautious. Support for the Nifty is seen at 18900-19000 band. Bank Nifty ended the week with bearish “Shooting star” candlestick pattern on the weekly chart, which is a short-term bearish trend reversal pattern.

The Bank Nifty index experienced selling pressure from the bears, leading to a correction throughout the day. This upper end movement by the bears suggests a potential reversal in the trend. The hurdle for the index is currently at 44500, where aggressive fresh call writing is observed. This level is expected to act as a resistance for further upside movement. The index broke below the support level of 45000, indicating a shift in the trend. However, a follow-up action is required to confirm and sustain the downward momentum. If the index manages to sustain below 45000 on a closing basis, it is likely to continue its downward momentum towards the levels of 44500 and 44200.

The Nifty experienced a significant decline after failing to maintain its position above 19500. This drop led to the index falling below the 21EMA on the hourly chart, indicating an increasing bearish sentiment in the market.

Furthermore, the hourly RSI has shown a bearish crossover, adding to the negative outlook. The immediate support level is identified at 19300, while the resistance level remains at 19500.

Markets witnessed profit taking on Friday and shed nearly a percent, tracking feeble global cues. After the initial downtick, Nifty tried to inch higher but pressure in the index majors across sectors pushed the index lower as the day progressed. Consequently, it settled closer to the day’s low at 19331.80 levels. Most sectors ended lower wherein FMCG, realty and energy were among the top losers. The broader indices too witnessed a dip and lost in the range of 0.5%-0.9%.

The decline has engulfed Thursday’s bullish move and indicates the possibility of consolidation in Nifty ahead. The key is to manage positions amid the consolidation phase as we generally see volatility swings. We thus recommend keeping a check on position size and maintaining strict risk management rules in place.

The domestic market succumbed to profit-booking as heat waves from weak global markets hit the shore. Global equities declined due to a spike in US bond yields, fuelled by expectations of a prolonged high-interest rate environment following a sharp increase in US private payroll data. Investors are eagerly awaiting the release of key US non-farm payroll and unemployment data today, which will provide further clues on the Fed's policy direction ahead of its July meeting.

Indian rupee closed 23 paise lower at 82.74 per dollar versus previous close of 82.51.

Benchmark indices ended lower on July 7 with Nifty around 19,300 amid selling across the sectors barring auto and PSU Banks.

At close, the Sensex was down 505.19 points or 0.77% at 65,280.45, and the Nifty was down 165.50 points or 0.85% at 19,331.80. About 1457 shares advanced, 1912 shares declined, and 118 shares unchanged.

Adani Ports, Power Grid Corporation, Apollo Hospitals, IndusInd Bank and Britannia Industries were among biggest losers on the Nifty, while gainers included Tata Motors, Titan Company, M&M, SBI and TCS.

Except Auto and PSU Bank, all other sectoral indices ended in the red with FMCG, Power, Realty down 1 percent each.

The BSE midcap index shed 0.8 percent and the smallcap index fell 0.28 percent.

-Buy rating, target at Rs 600 per share
-Improvement in growth trend, margin gains to be re-invested in A&P
-Company expects revenue growth including Badshah acquisition to exceed 10% in 1QFY24
-EBITDA margin is expected to be similar to Q1FY23
-All gross margin gains will be invested to step up A&P
-EBITDA growth will be largely in-line with revenue growth
-Sequential margin improvement will be very sharp from lows of 15.3% in Q4FY23

Dabur India was quoting at Rs 571.60, down Rs 20.05, or 3.39 percent.

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Indian Rupee depreciated on a weak tone in domestic markets and a rise in crude oil prices. The surge in short-term bond yields in the US and UK amid a hawkish tone of the central banks also put pressure on the Rupee. However, the soft US Dollar prevented a sharp fall. Most economic data releases from the US were stronger than forecast.

We expect Rupee to trade with a negative bias on risk aversion in global markets and rising bond yields. However, sustained FII inflows may support Rupee at lower levels. Market participants may remain cautious ahead of US non-farm payrolls, unemployment rate and hourly earnings data. A strong labour market would reinforce expectations of a rate hike by FOMC in July. We expect the USDINR spot to trade between 82.30 to 83.30 in the near term.

-Overweight rating, target at Rs 606 per share
-Improving demand trends in urban and rural markets during Q1FY24
-Management optimistic on the outlook
-Gross margin improvement should continue, supporting gains in EBITDA margin