Closing Bell: Sensex falls 181 pts, Nifty below 19,400; auto, pharma, metal drag

Taking Stock: Market squanders opening gains to end near day’s low; IT shines

Top Nifty losers included Reliance Industries, Grasim Industries, ONGC, Power Grid Corp and JSW Steel, while gainers were BPCL, Asian Paints, IndusInd Bank, Infosys and Britannia Industries... Read More

The Nifty remained under the bear's grip as selling pressure emerged around the day's high, resulting in a decline below 19500. On the upper side, resistance is expected to persist in the range of 19450-19500. A definitive breakout or a closing above 19500 could potentially trigger a rally in the index. On the lower side, there is immediate support at 19300; a drop below this level might lead to panic in the market.

The ongoing geopolitical and economic uncertainties like higher inflation, China economic jitters, and the pandemic-related economic distortions amid the Russia – Ukraine war continue to offer support to the safe haven status of gold in the immediate run. Hopes of a demand recovery from India may also contribute to the trend. However, it is unlikely for major rallies due to uncertainties over US rate hikes and the performance of US assets.

Investors can cautiously increase their exposure to gold as prices corrected about 5 percent from their all-time highs and the key demand season is nearing, which may increase the demand and thus the price of the metal. In addition, a weak Indian Rupee also offers additional support to the yellow metal.

The Bank Nifty index recently encountered selling pressure from elevated levels and is now displaying indications of range-bound trading. The range of movement seems to be established between 44000 and 45000, a zone where substantial put and call writing activities are evident. In the current scenario, the index's immediate support lies at 44200. If this support level is effectively maintained, the index could potentially experience a recovery, driving it towards levels of 44800 and 45000.

The Indian rupee gained for the third day in a trot following short covering, capital inflows and lower commodity prices. The central bank’s intervention this week has also supported the Indian currency. In the near term, spot USDINR tested 82.35 support, which if breached can expose 82.20 while 82.80 will act as resistance.

Given that the risk environment is a little weak, the forex market could trade in the tight range. Ahead of tomorrow's main event of the week – speeches at the Fed's Jackson Hole symposium – attention today will be on the US job report.

Markets traded volatile on the weekly expiry day and ended in the red. After the initial gap-up opening, Nifty extended gains in early trades but selling pressure in heavyweights pushed the index lower as the day progressed. Eventually, it settled around the day’s low at 19386.70 level; down by 0.3%. Most sectors were aligned to the trend wherein energy and pharma were the top losers. Amid all, the broader indices traded mixed wherein the midcap index closed higher while the smallcap index ended marginally lower after making a new record high.

The move indicates that bears are not in the mood to lose their control and tone may deteriorate again on the break of 50 EMA i.e. around 19285. We have been maintaining a view stance to focus on stock selection amid choppiness and it is working well so far. Traders should avoid aggressive positions and prefer hedged trades until we see some clarity over the next directional move.

While markets were volatile in early trades, it turned rangebound with a negative bias thereafter and finally ended on a subdued note as investors are not taking any chances by betting big in an uncertain global economic environment.

Investors will continue to take cues from global markets for direction as nobody wants to get caught off guard in case of any negative developments.

Technically, the Nifty has formed a bearish candle, which is largely negative. For bulls, 19470 would act as an immediate resistance zone, and if the index is trading below the same, the weak sentiment is likely to continue and could retest the level of 19325-19300. On the flip side, post 19500 breakout the market could rally till 19600-19625.

Given the ongoing trend of global central banks acquiring gold and the uncertain global economic landscape, gold prices are anticipated to remain steady, if not rise significantly due to the impact of a stronger dollar and elevated interest rates. However, the trajectory could swiftly change. The moment the Federal Reserve hints at a potential pause in its rate hikes or even the possibility of an interest rate cut, gold prices are likely to surge.

Taking these factors into account, investors can reasonably project an optimistic outlook for gold, foreseeing price levels in the range of 61000 to 62000 by the close of the year. It's a strategic move that aligns with both the weakening rupee and the traditional buoyancy of the festive season in India. For investors seeking to accumulate gold, a strategic entry point lies between the current levels of 58500 and 57000.

The US market exhibited a positive trend as declining US PMI ignited hopes of a prolonged rate pause, calming US bond yields. Optimism in the domestic market was more visible in the IT sector, though sentiments were reversed in other major sectors, likely influenced by the prevailing global uncertainties. Despite this, mid- and small-cap stocks demonstrated resilience, and the decline in bond yields facilitated a resurgence in foreign investor buying momentum.

The market began the weekly expiry day on a strong note at 19,540 and was seen compounding its gains with the help of banking counters; however, the Index failed to hold higher levels and started to correct. Selling pressure intensified in the second half of the trading session and the Index erased all its gains to trade in a negative territory. With a loss of 57.30 points, Nifty50 settled at 19,386.70.

On a sector-wise performance, the IT and FMCG held their gains while PSU Banking and Energy witnessed a correction. On an intraday basis, we have seen a whipsaw while on the daily chart, Nifty50 has made a bearish engulfing pattern which indicates a reversal.

Indian rupee ended 11 paise higher at 82.57 per dollar versus previous close of 82.68.

Benchmark indices ended lower in the volatile session on August 24 with Nifty below 19,400.

At close, the Sensex was down 180.96 points or 0.28 percent at 65,252.34, and the Nifty was down 57.30 points or 0.29 percent at 19,386.70. About 1725 shares advanced, 1768 shares declined, and 161 shares unchanged.

Top losers on the Nifty included Reliance Industries, Grasim Industries, ONGC, Power Grid Corp and JSW Steel, while gainers were BPCL, Asian Paints, IndusInd Bank, Infosys and Britannia Industries.

On the sectoral front, auto, capital goods, PSU Bank, oil & gas, pharma, metal shed 0.3-0.7 percent each, while Information Technology index up 0.5 percent.

The BSE midcap and smallcap indices ended on flat note.