Taking Stock: Weak economic data spells trouble for D-St; Sensex plunged over 200 pts

Indian markets witnessed sell-off in the second half of the trading session pushing the Sensex lower by over 200 points while the Nifty50 broke below 11,900 levels on a closing basis to touch two-week low. The rupee also breached its crucial level of Rs 72 per US Dollar in trade today.

The final tally on D-Street – the S&P BSE Sensex fell 229 points to 40,116 while the Nifty50 closed 73 points lower at 11,840 on November 13.

Weak economic data, muted global cues, and fall in the currency were the major cues which led to a sharp fall in Indian markets, suggest experts. Investors would watch out for the release of CPI data scheduled today.

"Post the recent rally, the gap between valuation and earnings growth has enlarged. Influencing investors to stay cautious ahead of heavy economic data being released this week,” Vinod Nair, Head of Research, Geojit Financial Services Ltd told Moneycontrol.

“Weak economic data and concerns over a slowdown in earnings growth are hurting investor sentiments. Despite a series of a rate cut from RBI, core sector growth remains muted and inflation is inching higher which may incline RBI to be watchful in the future,” he said.

In terms of sectors, the action was seen in Energy, as well as Consumer Durable stocks, while losses were seen in the Metal index, followed by Infra, realty, and Banks.

The Nifty Bank snapped its 4-day gaining streak to closed nearly 600 points down at 30,541, weighed down by losses in ICICI Bank, as well as, HDFC. It erased almost 65 percent of the gains made in the last 4 sessions. All of Nifty Bank constituents close in the red.

Bank Nifty near term charts suggest a sharp short-term correction. Experts feel that Bank Nifty could test 29,700-30,000 zone on the downside.

“In the near term, 30,900 zone is likely to act as a resistance zone. Banknifty is witnessing a phase of consolidation of its recent upmove which is normal,” Amit Shah, Technical Research Analyst with Indiabulls Ventures Ltd told Moneycontrol. Support for the index is seen at 30,400-30,000 levels.

Top Nifty gainers: RIL, TCS, and Britannia Industries were up 2-3 percent

Top Nifty losers: GAIL (down 5 percent), Yes Bank (down 6.5 percent), and Indiabulls HF (down 8.5 percent)

Stocks & Sectors:

Sectorally, the S&P Energy index rose 1.6 percent, followed by the S&P Consumer Durable index which was up 0.39 percent.

On the losing front, the pressure was seen in the Metal index which was down more than 2 percent, followed by Realty, and Banking index.

Volume spike of 200-500 percent was seen in stocks like Mahanagar Gas, Century Textiles, Divi’s Laboratories, Sun TV, JustDial, Tech Mahindra, and Britannia Industries.

Long Buildup: Century Textiles, Mahanagar Gas, Voltas, Ashok Leyland

Short Buildup: Sun TV, JustDial, Equitas, Balkrishna Industries

Stocks in news:

Share price of FMCG major Britannia Industries jumped nearly 5 percent on November 13 after the company posted 32.90 percent increase in consolidated net profit at Rs 402.73 crore for the quarter ended September 30, 2019.

Share prices of Vinati Organics ended close to 6 percent lower on November 13 after the company announced its September quarter results and sub-division of share price.

Shares of Edelweiss Financial Services ended 5 percent higher on November 13 after a private equity firm said it is going to invest Rs 525 crore in the company's investment advisory business.

Share prices of Mahanagar Gas ended over 3 percent higher on November 13 as global brokerages remained bullish on the stock in view of the company's quarterly numbers. Citi has a buy rating on the stock due to reasonable valuations as the stake-sale overhang is behind it now.

Infosys ended almost 2 percent lower on November 13 as shares of the company have been under pressure of late as reports of whistleblower complaints spooked investors. The board of software major Infosys was sent a second whistleblower letter, which accused CEO Salil Parekh of “eroding the company’s value systems” by incurring high and unnecessary travel costs.

Financial stocks fall the most: Nifty PSU Bank is the biggest drag, down over 3 percent led by Union Bank of India, State Bank of India, Indian Bank, Central Bank of India, OBC and Bank of Baroda. The other losers included Axis Bank, ICICI Bank, PNB, RBL Bank and YES Bank.

Nifty Financial Services is down over a percent dragged by Indiabulls Housing Finance, M&M Financial Services, Power Finance Corporation, REC, and Kotak Mahindra Bank.

Technical Outlook:

The Nifty50 formed a bearish candle on the daily charts

It witnessed resistance above it its 5-Days EMA near 11,950

The Nifty50 appears to have bounced after testing its 13-Days exponential moving average placed at 11,834 from where it recovered in the recent correction with a low of 11490 registered on 25 th of October.

Daily MACD triggered a sell signal in today’s session.

The index now remains vulnerable for more downsides unless it closes above 11950 levels, suggest experts. Traders with a high-risk appetite can continue to remain short on Nifty with a stop placed above 11,950 on a closing basis

Three levels: 11823, 11946, 12034

Max Call OI: 12000, 11800

Max Put OI: 11600, 11500

Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.