Closing Bell: Nifty below 19,400, Sensex falls 224 pts; IT drags, PSU Banks gain

Taking stock: Sensex drops 224 points as IT, banks see sell-off; Nifty below 19,400

Broader market indices fared better and closed with gains. However some stocks were negatively affected by changes in GST tax rates.... Read More

Domestic equities witnessed some slide today from their highs after remaining in the consolidative mode over the last six trading sessions. Rebalancing in the benchmark indices due to the merger of HDFC twins led to many changes at the index level and the adjustments took place in the last 30 minutes today.
Nifty opened higher but last-30 min selling in the heavyweight led the index to close near the day’s low with a loss of 55 points at 19384.

Sectorially it was a mixed bag with buying seen in PSU Banks. We expect the market to remain in consolidative mode with support at lower levels. Investors would react to the domestic and US CPI data that would be released today. TCS and HCL Tech results would give cues for other IT majors. Auto, PSU Banks, Pharma, building material, and defence sector stocks could continue to see positive momentum.

The bears continue to dominate the market, as the index broke below the support level of 44800. This suggests a bearish sentiment in the index.

The next support level on the downside is located at 44500 levels. If the index dips towards this level, it may present an opportunity for traders to initiate long positions, expecting a potential bounce from this support.

On the upside, the immediate hurdle is at 45000, where the highest open interest is observed on the call side. This level may act as resistance for the index.

The Nifty continued to trade within the range 19300 – 19550 for the seventh trading session. On the daily charts we can observe that the Nifty is facing resistance in the zone 19500 – 19550, around the previous swing high. The hourly momentum indicator has triggered a negative crossover and is whipsawing on account of the sideways consolidation in the Nifty.

Until we get a decisive close beyond the extremes of the range (19300 – 19550) we can expect the consolidation to continue. The strategy to trade such a consolidation would be to take a contrarian view around the extremes of the range. In this case we are approaching the lower boundary 19300 and hence we should look out for a sign of strength around the support and go long.

Overall, the trend is positive, and Nifty is undergoing time wise correction. Crucial support zone stands at 19300 – 19280 while the resistance zone is placed at 19460 – 19485.

As far as Bank Nifty is concerned, the Index continued to correct and traded in a downward sloping channel. It has now reached the lower end of that channel and also the 50% fibaonnci retracement level (44600) which should attract buying interest. We expect the Bank Nifty to start recovering as it has now reached crucial support zone. On the upside initially we expect it to target 45000.

Markets showed resilience in early trades, but the upward march had been showing signs of fatigue of late and investors today pulled the plug ahead of key domestic inflation data and the US CPI inflation to be released late in the evening.

As the global economy remains under pressure, local markets are likely to witness bouts of profit-taking during such prolonged rallies. On daily charts, the index has formed a small bearish candle and has also formed a lower top formation on intraday charts.

As long as the index is trading below 19450 the weak sentiment is likely to continue. Below which, the market could slip till 19300-19250. On the flip side, above 19450, the sentiment could change and the market could retest the level of 19500. Further upside may lift the index till 19575.

Markets remained volatile for yet another session and settled lower, in continuation to the prevailing consolidation phase. After the initial uptick, Nifty hovered in a narrow range for most of the session however a sharp dip in the last hour pushed the index in the red. Consequently, it settled closer to the day’s low at 19378 levels.

The tone was subdued on the sectoral front however positivity on the broader front kept the traders busy.

Indications are in favor of further consolidation in the index, so participants have no option but to focus on stock-specific opportunities. The recent surge in the US markets is encouraging but we need sustainability of the move. Meanwhile, Nifty has been hovering within the 19300-19550 zone and either side break would offer cues over the next directional move.

The range-bound movement in the Indian indices was influenced by the likelihood of subdued IT earnings. While optimism about moderation in US inflation supported the broad index.

Further, an uptick in domestic food inflation on the back of higher mandi prices trending above MSP and muted Kharif sowing forced the investors to be cautious. Monsoon progress and the Kharif sowing trend in July are the keys to the future inflation trend.

The increase in Goods and Services Tax (GST) to 28% is expected to have a significant impact on the gaming industry. This tax hike will likely lead to several consequences for both game developers and consumers. Firstly, game developers may face higher production costs as they will have to pay more taxes on their equipment, software, and other resources. This could potentially discourage new game development ventures and hinder growth and innovation in the industry.

Moreover, the increased GST rate may also result in higher prices for gaming consoles, accessories, and software, making them less affordable for consumers. This could potentially lead to a decline in sales and a decrease in the overall demand for gaming products. As a result, gaming companies may witness a decrease in their revenue and profitability.

Additionally, the higher tax rate may impact the competitiveness of the gaming industry in comparison to other entertainment sectors. Consumers might opt for alternative forms of entertainment that are not subjected to such high tax rates, potentially causing a shift away from gaming.

Overall, the increase in GST to 28% is likely to have adverse effects on the gaming industry, including increased production costs, decreased consumer affordability, and reduced competitiveness.

Indian rupee ended 12 paise higher at 82.24 per dollar on Wednesday against Tuesday's close of 82.36.

Benchmark indices ended lower in the volatile session on July 12 with Nifty below 19,400.

At close, the Sensex was down 223.94 points or 0.34% at 65,393.90, and the Nifty was down 55.10 points or 0.28% at 19,384.30. About 1696 shares advanced, 1668 shares declined, and 139 shares unchanged.

Top losers on the Nifty were LTIMindtree, Adani Enterprises, UltraTech Cement, Infosys and BPCL, while gainers included ONGC, Eicher Motors, Nestle India, JSW Steel and Kotak Mahindra Bank.

Among sectors, pharma, PSU Bank ended in the green, while selling was seen in the information technology and banking names.

BSE midcap and smallcap indices up 0.5 percent each.

The Utkarsh Small Finance Bank (SFB) public offer received bids for 32 crore shares against an issue size of 12 crore units on the first day of bidding today, exchange data showed at 2:57 pm. The IPO will close on July 14.

Retail investors have bought 9.1 times their allotted quota and employees have subscribed 1.73 times. As many as 21 lakh shares have been reserved for employees of which 37 lakh shares have been booked, Bombay Stock Exchange (BSE) data showed.

Institutional investors have not yet bid for the issue. The non-institutional portion of the IPO has been subscribed 3.9 times, with bids received for 12.1 crore shares, against the reserved portion of 3.2 crore shares.

BSE Buyback: Gun for a quick buck or look at the bigger picture?

Derivatives can be a big playing ground for the BSE. In one and a half months, BSE has already taken 1 percent market share in total derivatives notional turnover... Read More

-Downgrade to neutral from buy, target at Rs 3,280 per share
-Downgrade is on back of recent rally in stock price
-Target multiple of 60x FY25e P/E factoring in growth potential
-See limited scope of further re-rating & earnings upgrade

Titan Company was quoting at Rs 3,102.10, up Rs 13.75, or 0.45 percent on the BSE.