Closing Bell: Nifty around 19,650, Sensex falls 440 pts; autos slip, pharma, realty gain

Taking Stock: Bulls fail to hold grip; Nifty around 19,650, Sensex dips 440 points

On the sectoral front, auto, oil & gas, bank and FMCG indices down 0.5-1 percent each, while pharma index up 3 percent and realty index up 2 percent.... Read More

The Nifty witnessed selling pressure throughout the day and closed in the negative down ~120 points. On the daily charts, we can observe that the Nifty has faced resistance from the 61.82% Fibonacci retracement level (19850) and started the next leg of the fall. The daily as well as hourly momentum indicator has a negative crossover which is a sell signal. Thus, both price and momentum indicators are suggesting that there could be some weakness in the short term. The daily Bollinger bands are also contracting, which points towards consolidation in the short term and thus we change our short-term stance from positive to sideways and the range of consolidation is likely to be 19900 - 19500. In terms of levels, 19550 – 19500 shall act as a crucial support zone, and on the upside 19850 - 19900 shall act as an immediate hurdle zone.

Bank Nifty also witnessed a correction from the resistance zone 46300 – 46400 where the previous swing highs were placed. The daily momentum indicator has triggered a fresh negative crossover which is a sell signal. Thus, until the Bank Nifty does not manage to sustain above the 46300 – 46400 zone we can expect it to slip down to 45330 – 45300 levels where support in the form of the 20-day moving average is placed.

Markets reversed yesterday's gain on the monthly expiry and shed over half a percent. After the initial uptick, Nifty surrendered all its gain as the day progressed and final settled at 19659.90 levels. Meanwhile, a mixed trend on the sectoral front kept the traders busy wherein auto, banking and oil & gas ended lower while pharma and realty posted strong gains. The positive tone of broader indices offered further opportunities.

We are in a consolidation phase so it is normal to see volatile swings. The key is to manage risk until the trend resumes. Meanwhile, we feel it is prudent to restrict positions and use intermediate dips to gradually add quality stocks.

Citing the elevated inflation as a key rationale; the Fed raised the interest rates by 25bps which now stands at its highest levels since early 2001. The hike was pretty much on the expected lines and was already factored in by the markets. Indian equities did start the monthly expiry day on a strong note, but it did not last for too long and the index began to wipe off the initial gains. The last session saw a sudden fall across the board dragging the Index further lower to end the session at 19,659.90 with a loss of 118.40 points.

The star performer of the day was the Pharma sector ending the day at record levels followed by the Realty sector which regained its lost momentum and ended the day with gains of 2.12%, while on the flip; Auto, Banking, and FMCG stood out as the major laggards. Mid and Smallcap indices managed to outperform the Nifty50. Both Nifty and BankNifty have formed a bearish engulfing pattern which indicates short-term weakness in the market.

Markets witnessed wild gyration on the expiry day as the US Fed signalling one more rate hike dampened the sentiment and prompted investors to book profit in automobile, banking and oil & gas shares. However, realty and pharma shares were in limelight after the recent correction. Many investors are not comfortable with the current valuations, and hence are redeeming their investment on every possible opportunity.

Technically, on daily charts the Nifty has formed a lower top and bearish candle which is indicating further correction from the current levels. For traders now, 19800 would be the key resistance zone and below the same, the correction wave is likely to continue till 19600-19550. On the flip side, above 19800 the market could rally till 19875-19900.

The FOMC's decision aligned with market expectations as they implemented a 25bps hike and expressed a data-centric approach for future rate actions. Positive global sentiment prevailed due to the reduced prospects of a US recession. Despite this, the domestic market witnessed sharp corrections led by banks and autos, while pharma stocks performed on a positive start to their earnings season.

Market Close: Benchmark indices ended on a negative note on July 27 with Nifty at 19,700.

At close, the Sensex was down 440.38 points or 0.66% at 66,266.82, and the Nifty was down 118.40 points or 0.60% at 19,659.90. About 1722 shares advanced, 1735 shares declined, and 133 shares unchanged.

The top losers on the Nifty were M&M, Tech Mahindra, Tata Consumer Products, Nestle India and Britannia Industries, while gainers were Cipla, Sun Pharma, Divis Labs, Apollo Hospitals and Bharti Airtel.

On the sectoral front, auto, oil & gas, bank and FMCG indices down 0.5-1 percent each, while pharma index up 3 percent and realty index up 2 percent.

The BSE Midcap index rose 0.5 percent, while Smallcap index ended on a flat note.

ACC has posted net profit of Rs 466.1 crore in the quarter ended June 2023 versus Rs 227 crore and revenue was up 16.4% at Rs 5,201.1 crore versus Rs 4,468 crore, YoY.

-Overweight rating, target at Rs 425 per share
-Reported core earnings in line
-Outlook has gotten better as global fuel demand has improved
-Balancesheet net debt has been more than halved
-Expect upside risks from lower net debt & improved refining margin

-Overweight rating, target raised to Rs 1,210 per share
-Strong US drives beat, outlook for key markets remains robust
-PAT beat estimates by 19% primarily driven by strong growth in US & India
-Market beating growth outlook for India business is a positive
-Strong pipeline of complex assets to drive growth beyond FY25 in US

Indian Rupee gained on the weak US Dollar and positive Asian and European markets amid stimulus talks from China. However, weak domestic markets and a surge in crude oil prices capped sharp gains. FOMC hiked interest rates by 25 basis points to 5.25%-5.50% range, the highest in 16 years. However, the US Federal Reserve kept its options going forward open as it made future cases depending on incoming data.

We expect Rupee to trade with a slight negative bias on expectations of a hawkish tone from key global central banks to tame inflation and rising crude oil prices. Month-end Dollar demand from importers and worries over global economic slowdown may also weigh on the rupee. However, FII inflows may support Rupee at lower levels. We expect the USDINR spot to trade in the range of 81.50 to 82.30 in the near term.

Godawari Power & Ispat has recorded 29.4 percent fall in its Q1 net profit at Rs 231 crore versus Rs 327 crore and revenue was down 20.4% at Rs 1,325.6 crore versus Rs 1,666.3 crore, YoY.

-Overweight rating, target at Rs 1,000 per share
-PAT was 2% ahead of estimate driven by lower provisions, core PPoP was a miss
-Sequentially, core NIMs compressed driven by deposit re-pricing
-Loan growth was modest at 2% QoQ
-Asset quality saw some normalisation with slippages, credit cost at 50 bps
-Treasury gains helped the bank to print RoA at 1.8%