Closing Bell: Sensex, Nifty end flat amid volatility; metal, power stocks outshine

Taking Stock: Markets end flat, Nifty below 19,700; ITC, Asian Paints top losers

The Street is now eyeing the Fed's rate outcome, scheduled to be out by the midnight of July 26... Read More

Nifty swung between gains and losses before closing marginally in the green on July 25. At close, Nifty was up 0.04% or 8.3 points at 19680.6. Volumes on the NSE continued to be on the higher side. Broad market indices rose more than the Nifty even as the advance decline ratio ended in the positive at 1.02:1.

Asian stock markets followed Wall Street higher on Tuesday after China’s ruling Communist Party promised to shore up its sagging economy ahead of a Federal Reserve meeting that traders hope will announce this interest rate cycle’s final increase.

European stocks made muted moves on Tuesday.

Nifty made a near hammer like pattern after a two-day fall, suggesting possibility of a short term upward reversal. Nifty could stay in the 19783-19567 band for the near term.

The Nifty opened on a positive note, however, it was unable to sustain at the higher levels and witnessed selling pressure during the first half of the session. The Nifty took support at the 50% Fibonacci retracement level (19650) of the rise from 19300 – 19992 and witnessed a bounce back which helped the Nifty to close marginally in the green. The correction is unlikely to result in a trend reversal and this intermediate pullback should be used as a buying opportunity. The primary trend is positive and hence we shall continue to maintain a bullish short-term outlook. In terms of levels, 19615 – 19560 shall act as a crucial support zone, and on the upside 19830 - 19850 shall act as an immediate hurdle zone.

Bank Nifty closed in the red today for the third consecutive day. It witnessed selling pressure after opening on a positive note indicating that it was unable to sustain at higher levels. On the downside, 45670 – 45460 which are the 38.2% and 50% Fibonacci retracement levels are likely to act as a strong support zone from a short-term perspective. Overall, the trend is still positive and once this consolidation is complete, we can expect the Bank Nifty to resume its uptrend. On the upside 46500 is the expected target.

Markets oscillated in a range and ended flat, taking a breather after the recent dip. Meanwhile, a mixed trend on the sectoral front kept the participants busy wherein metal and auto decent gains. We saw selective participation from the broader front as midcap index edged higher while smallcap closed almost unchanged.

Indications are in favour of further consolidation in index and upcoming monthly expiry of July month derivatives contracts would keep the volatility high. Besides, the performance of the US market will also be in focus for cues. We thus recommend preferring hedged trades until Nifty resumes the trend.

Indian indices hovered along the flat line, waiting ahead for the crucial decision of Fed policy. Metal stocks rose due to China's commitment to provide policy support to its realty sector, while utilities were up in anticipation of demand & improvement in operating margin. The recent correction of the domestic market can be attributed to several factors, including muted start to Q1 results, a reversal in FII activity, a rising dollar index, and an increase in crude oil prices.

Markets were volatile but moved in a range as investors in a cautious mood are engaged in selective profit-taking, after the markets had run-up to record highs over the past few weeks. The US FOMC meeting outcome on Wednesday is the major catalyst although the market is not expecting any major surprise on the interest rate front. However, the Fed's comment would be keenly watched as it would provide some clarity on the rate movement going ahead.

Technically, after a two days correction the market witnessed range bound activity near the 10-day SMA (Simple Moving Average). On daily charts the index has formed a small bearish candle and on intraday charts it is witnessing selling pressure at higher levels. For day traders, 19620 would be the key support level, and if the index trades above the same, we could expect a quick pullback rally till 19720-19750. On the flip side, dismissal of 19620 could accelerate selling pressure and below the same, the index could slip till 19570-19550.

Indian rupee closed marginally lower at 81.87 per dollar versus previous close of 81.82.

Benchmark indices ended on a flat note in the volatile session on July 25.

At Close, the Sensex was down 29.07 points or 0.04% at 66,355.71, and the Nifty was up 8.30 points or 0.04% at 19,680.60. About 1686 shares advanced, 1754 shares declined, and 135 shares unchanged.

Top gainers on the Nifty were Hindalco Industries, JSW Steel, Tata Steel, NTPC and UltraTech Cement, while losers included Asian Paints, ITC, Britannia Industries, IndusInd Bank and Larsen and Toubro.

Among sectors, metal and power indices up 2 percent each, while PSU bank, capital, FMCG and realty down 0.5-1 percent.

BSE Midcap and Smallcap indices up 0.3 percent each.

Indian Rupee declined on a surge in crude oil prices and a rise in the US Dollar. However, positive global markets on China’s stimulus talks and sustained foreign inflows cushioned the downside.

We expect Rupee to trade with a slight negative bias on concerns over global economic slowdown, amid disappointing global PMI data which may strengthen the safe-haven US Dollar. However, reports of the selling of the US Dollar by China amid stimulus talks may support Rupee at lower levels. Traders may remain cautious ahead of CB consumer sentiment data from the US today and the FOMC meeting outcome.

There are expectations of a 25-bps rate hike. Investors may remain cautious ahead of Fed Chair Powell’s statement for the central bank’s guidance. We expect the USDINR spot to trade in the range of 81.40 to 82.40 in the near term.

-Overweight rating, target at Rs 2,968 per share
-Core PAT missed estimate amid weaker volume in refrigerant gases & near-trough earnings
-Attributed fluorochemicals volume miss to mild summer & tough demand in key markets
-Highlighted near-term risks to specialty chemical earnings amid inventory destocking
-Believe these challenges pose 18-20 percent downside to earnings estimate

In the wake of a strong handover of West and Asian currencies, the Indian rupee opened a gap-up, but RBI might have intervened in the market along with the dollar demand from hedgers erasing the gains.

Inflows of foreign funds and a weaker greenback are likely to benefit the rupee, but a sharp appreciation may not be appropriate when we hold a large amount of foreign exchange reserves ($600 billion).

Technically, spot USDINR has immediate support at 81.60 (lowest low since February) and breaking it accelerates selling towards 80.90 while crossing 82.50 will reverse the trend.

-Buy rating, target at Rs 1,539 per share
-Ahead of industry growth to continue, Q1 margin slightly below
-Strong product performance across segments to drive stock
-Estimate FY24/25 EBITDA margin at 11.3 percent/11.8 percent to factor in slightly higher costs

-Buy rating, target at Rs 106 per share
-Dr Schneider acquisition to strengthen polymer
-Await management commentary
-Acquisition would imply valuation of 0.24 EV/sales & 3.4x EV/EBITDA, lower end of peer valuations
-Believe EPS accretion can be >2 percent in the first year, which is a positive