Closing Bell: Nifty below 19,400, Sensex down 388 pts; PSU Banks outperform

Taking Stock: Nifty below 19,400; Sensex down 388 points; FMCG, oil and gas take a hit

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USDINR spot is trading at 83.14, up 18 paise, due to rise in the US bond yields and fall in the Chinese currency. We suspect RBI may have intervened and sold dollars.

However, over the near term, bias remains upward and we could see USDINR breaching 83.24, previous all-time highs. We expect a range of 82.90 and 83.80 on spot.

Profit taking came to the fore amid weak global cues, as rising US bond yields and fall in the currency levels weighed on the equity market sentiment. Investors are also worried about further rate hikes coupled with deflation and slowing demand in China, which has been prompting investors to flee equity markets amid choppy trends. Technically, the market is consistently facing selling pressure near the 19480 level while regularly taking support near 19320.

In addition, on daily charts, the index has formed a bearish inside candle which indicates that non-directional activity is likely to continue in the near future.
We are of the view that, 19320 could be the sacrosanct support zone for the market, below which, the index could slip till 19250-19200, while any fresh uptrend rally is possibly only after the dismissal of 19480. Above the same, the market could move up till 19535-19585.

The Nifty witnessed a weak day of trade today. It opened on a negative note and continued to drift lower throughout the day to close in the negative down ~100 points. On the daily charts, we can observe that the Nifty has been range bound between 19250 – 19500 since past three trading sessions. On the downside, the zone of 19300 – 19400 where support in the form of the 40-day moving average and the daily lower Bollinger band is placed is acting as crucial support while 19450 – 19500 where the falling resistance trend line is placed is acting as a resistance. Thus, the Nifty is consolidating between these two parameters.

The daily and the hourly momentum indicator has a negative crossover which is a sell signal. Overall, there a no signs of a trend reversal, and hence the short-term outlook is negative. On the downside we expect the Nifty to target levels of 19100.

Bank Nifty has closed in the negative for the sixth consecutive trading session. It has reached the 20-week moving average (43800) and hence the fall may not be severe from current levels. The trend is still negative however oversold and we can observe divergence on the hourly charts which indicates that a pullback is possible over the next few trading sessions. The pullback can stretch higher till 44400 – 44500.

The Indian rupee traded lower in line with the Asian currencies and risk-averse sentiments. The greenback enjoyed good momentum reacting to July FOMC minutes signalled clear openness to more tightening. The market is still reluctant to price in a Sept hike, but the higher for longer vibes are certainly there as US 10 Year yields hit 4.29%, a level last seen 15 years ago.

Back home, spot USDINR is just a few paise away from a life high of 83.29. We remain bullish on the pair and a crossing of 83.30 will pave the way for 83.50 and 83.70 while expected to hold the support at 82.70.

The mounting influence of weak global cues hindered the domestic market's ability to recoup, resulting in sustained selling pressure. The release of Fed minutes unveiled a divided stance among its members regarding the necessity of additional rate hikes, contrasting the previously anticipated rate pause. Concurrently, the Indian rupee experienced a decline due to the dollar index surpassing 103.5; however, likely intervention from the RBI offered a degree of support. Moreover, the escalation of US bond yields is expected to limit the influx of foreign investments into the Indian market, further impacting market dynamics.

Indian rupee ended 20 paise lower at 83.15 per dollar on Wednesday against Monday's close of 82.95.

Benchmark indices ended lower on August 17 with Nifty below 19,400 amid selling across the sectors barring PSU Banks.

At close, the Sensex was down 388.40 points or 0.59 percent at 65,151.02, and the Nifty was down 99.70 points or 0.51 percent at 19,365.30. About 1777 shares advanced, 1696 shares declined, and 152 shares unchanged.

ITC, LTIMindtree, Divis Lab, Power Grid and Reliance Industries were among the top losers on the Nifty, while gainers included Adani Ports, Titan Company, Adani Enterprises, Bajaj Auto and SBI.

Except PSU Bank, all other sectoral indices ended in the red with capital goods, Oil & Gas, power, FMCG and Information Technology down 0.3-0.9 percent.

The broader indices outperformed the main indices with BSE midcap and smallcap indices ended marginally higher.

-Maintain buy call, target raised to Rs 100 from Rs 95 per share
-Tempering down volumes in-line with CONCOR’S assumptions
-Q1 volumes were weak for co given the EXIM weakness
-Lower our FY24-25 EPS estimates, but believe FY23-26 EPS CAGR will be 20%+

KNR Constructions is expected to benefit from the government’s infrastructure spending, especially on roads and highways. However, in the near term, the company faces a highly competitive environment along with delays in opening up of bids. However, its order book remains healthy, providing revenue visibility over the next two years. Additionally, it is looking at other sectors, such as state highway projects, irrigation, urban infrastructure, railways and metros, which can provide growth.

The company’s de-leveraged balance sheet and contained outstanding receivables in irrigation provide comfort.

Broking house retain Buy rating on the stock with an unchanged price target (PT) of Rs 301, considering healthy earnings growth outlook led by positive sector growth outlook.

-Buy rating, target at Rs 1,240 per share
-Risk profile of asset rose more than peers led by growth in SME & retail loans
-Quality is strong, factor normalisation of credit costs from FY24
-Bank fell short on PSL & had higher NPLs, beefing-up of non-urban branches can help
-Unlike peers, deposit franchise is strong and attrition rate fell YoY
-See 16% CAGR in profitz

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