Closing Bell: Nifty below 19,450, Sensex down 366 pts; PSU Banks gain

Taking Stock: Market extends losses; Sensex down 366 points, Nifty below 19,450

For the week, the Sensex shed 0.6 percent and the Nifty 0.45 percent... Read More

Nifty fell for the second consecutive session on August 11, pulled down by weak global cues. At close, Nifty was down 0.59% or 114.9 points at 19428.3. Broad market indices fell less than the Nifty even as the advance decline ratio dipped to 0.65:1.

European and Asian stocks fell on Friday as traders closed out a week marred by geopolitical tensions between China and the US, and softer economic data that dented valuations in China. Hawkish language from a US central banker also put traders in a risk-off mood.

Nifty on August 11, built on the weakness from the previous session. On a weekly basis, it fell for the third consecutive week falling 0.45%. As the Q1 results season has come to an end, we could see a broad based profit taking in the markets even as the global cues are also not helping currently. 19300 could be the next support for Nifty while 19645 could now prove to be a resistance. A breach of 19300 could take the Nifty to 18887 over the next few weeks.

Aside from the first hour, the Nifty remained predominantly rangebound, with the benchmark index slipping below 19500. However, it did not experience a significant correction as traders chose to stay on the sidelines due to the upcoming holidays. From a technical standpoint, the Nifty continues to exhibit a bearish trend as it remains below the 21-day Exponential Moving Average (21EMA).

The Relative Strength Index (RSI) is also indicating a bearish crossover. In the short term, there's a possibility that the index might decline towards the 19300 level. On the upside, there's a resistance level situated at 19500.

Markets traded under pressure and lost over half a percent, in continuation to the prevailing corrective tone. After the initial fall, Nifty hovered in a range but selling pressure in the final hours pushed the index further lower. Eventually, it settled closer to the day’s low at 19428.30 levels. Most sectors traded in sync and ended in the red wherein pharma, financials and FMCG were among the top losers. The broader indices too drifted lower and lost nearly half a percent each.

Apart from the continued underperformance from the banking majors, profit taking in other key sectors is adding to the pressure. Indications are pointing towards the possibility of retesting 19,300 in Nifty again. Traders should align their positions accordingly and focus more on risk management.

The Bank Nifty index is currently dominated by bears, as evidenced by the breach of the crucial support level at 44400 on a closing basis.The prevailing sentiment seems to lean towards selling on rallies, with an immediate resistance level observed around 44500.

Looking ahead, the next significant support is positioned at 43700, which might serve as a buying zone for the bulls, potentially triggering a bounce back.

Although the Indian rupee lost ground for a third consecutive week, it outperformed among Asian currencies after the RBI's status quo by removing extra liquidity. A weaker Asian currency and higher agriculture commodity prices also adversely affected the rupee.

Next week will be a holiday-truncated week for the forex market, with bank holidays on Tuesday and Wednesday on account of Independence Day and Parsi New Year, respectively. The trading activity will remain light, but the direction for the rupee remains downward, and the rupee could see a fall below 82.95 in the coming days.

The domestic market continued to experience selling pressure, with banking stocks extending their decline in reaction to the RBI's liquidity absorption measures. The escalating concerns about inflation further weighed down domestic market sentiments. Despite the US CPI coming in lower than expected and the UK GDP beating estimates, global sentiment remained unfavourable.

Weak European and Asian market cues coupled with concerns that China slipping into stagflation amid slackening demand is making investors jittery and prompting them to offload in domestic equities. With FII flows turning choppy this month so far, markets are struggling to maintain the upward bias amid rise in intra-day volatile trades. Technically, during the week, the market is consistently witnessing selling pressure near the 20-day SMA (Simple Moving Average). On daily and intraday charts, the Nifty has formed a lower top formation, which indicates further weakness from the current levels.

As long as the index is trading below 19560, the weak texture is likely to continue and could retest the level of 19300-19250. On the flip side, above 19560, the chances of hitting 19670-19700 levels are bright.

For Bank Nifty, it is trading below the 50-day SMA and holding a lower top formation on daily charts, which is largely negative. For traders, the 50-day SMA or 44700 would act as a key level to watch out for and below the same it could slip till 44000-43700. On the other hand, above 44700, the index could rally till 45000-45200.

The Nifty opened on a flat note and has drifted lower throughout the day to close around the lows for the day down ~100 points. On the daily charts, we can observe that the Nifty has witnessed follow-through selling pressure and broken down from the inside bar pattern formed in the previous trading session on the downside. The Nifty is likely to witness continuation of the selling pressure and with both the daily and hourly momentum indicators having a negative crossover, it is likely to be trending moves on the downside. On the downside, we expect the Nifty to target levels of 19100. The crucial support zone on the downside is placed at 19350 – 19290 and on the upside, resistance is placed at 19530 – 19500.

Bank Nifty has decisively broken the 44500 – 45000 range on the downside indicating weakness. The momentum indicator has a negative crossover which is a sell signal. Thus both price and momentum indicators are suggesting a further downside over the next few trading sessions. On the downside 44000 is the short-term target.

Indian rupee ended 14 paise lower at 82.85 per dollar on Friday against Thursday's close of 82.71.

: Benchmark indices ended lower for the second consecutive session on August 11 with Nifty below 19,450.

At close, the Sensex was down 365.53 points or 0.56 percent at 65,322.65, and the Nifty was down 114.80 points or 0.59 percent at 19,428.30. About 1491 shares advanced, 1988 shares declined, and 136 shares unchanged.

Top losers on the Nifty were IndusInd Bank, NTPC, SBI Life Insurance, Divis Labs and UPL, while gainers included HCL Technologies, Titan Company, Power Grid Corporation, UltraTech Cement and Reliance Industries.

Among sectors, PSU Bank index gained 1.2 percent and pharma index down 1 percent, while bank, auto, FMCG, metal and oil & gas down 0.5 percent each.

The BSE midcap and smallcap indices also ended with marginally losses.

Net profit up 30.3% at Rs 814.1 crore versus Rs 620 crore and revenue up 8.1% at Rs 3,915.4 crore versus Rs 3,622.5 crore, YoY.

We expect crude oil prices to see some consolidation hereon as the data released through the weak send worrying signals from China as the economy is on the deflationary trail on an annual basis. Oil prices jumped around 20% in six weeks fueled by the supply cuts of around 5% of global supplies from OPEC+. WTI prices trade above $82/b on Friday and may see the first weekly decline after six straight weeks. The US headline inflation has shown an uptick of 0.2% in July which is expected to jump further in the coming months which will keep the central bank policymakers on tight ropes.

Outlook: Overall oil prices are set to breach $85 supported by the planned output cuts from OPEC+ but the demand side fundamentally deteriorating faster in China and Eurozone to drag down the global expansion. Expect prices to see some correction to hold around $80.