Closing Bell: Nifty below 19,700, Sensex falls 300 pts; FMCG, metals major drag

Taking Stock: Negative start to the week; Sensex down 299 points, Nifty below 19,700

FMCG names hammered led by ITC, which announced the demerger of its hotels business. Selling also seen in metals and oil & gas. Pharma and healthcare indices see some buying... Read More

The Nifty opened on a flat note and traded with a negative bias to close in the red down ~73 points. On the daily charts, we can observe that the Nifty is retracing the rise from 19303 – 19992. Currently, it is around the 50% Fibonacci retracement level and is expected to attract buying interest.

The daily momentum indicator has triggered a negative crossover which is a sell signal. Both price and momentum indicators are indicating weakness. However, we are still of the opinion that this is a dip that should be bought into as the overall uptrend is still intact. In terms of levels, 19600 – 19580 shall act as a crucial support zone, and on the upside 19800 - 19840 shall act as an immediate hurdle zone.

Bank Nifty closed in the red today. It witnessed selling pressure from around 46200 levels and drifted lower. We believe that Bank Nifty is in the process of retracing the rise it has witnessed from 44547 – 46370. On the downside, it can slip towards 45750 - 45670 where support is in the form of the 38.2% Fibonacci retracement level and the 40-hour moving average is placed. 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.

Domestic equities ended in a negative zone amid mixed results locally as well as globally and disappointing German PMI. Nifty opened flat and moved in a narrow range to close with a loss of 73 points at 19672 levels.

The majority of the sectors ended in red with FMCG down 1.7%. While Pharma, PSU Bank, and Realty ended in the green. Niche sectors like railway stocks were in the limelight after media reports suggest Indian Railways plan to float a tender of ~ Rs 25k crore to procure 60k wagons in July-Sept.

We expect some cautiousness ahead of the US Fed meeting where in 25bps hike is expected, while investors keenly await commentaries. With the quarterly earnings season now at full pace during the week, we expect stock-specific action to continue in the market.

Nifty fell for the second consecutive session on July 24 dragged down by profit taking post results from some companies. At close, Nifty was down 0.37% or 72.7 points at 19672.4. Volumes on the NSE continued to be healthy. Midcap index ended in the positive even as the advance decline ratio was steady at 0.93:1.

Global markets were mixed as investors braced for the busiest week of the earnings season and key central bank policy meetings. A sharp decline in manufacturing and services gauges from the Euro region fanned concerns about the faltering global economy.

Nifty formed a lower top, lower bottom formation on July 24 compared to the previous session and closed almost at the intra day low. 19595 and 19524 are the next supports for the Nifty while 19832 could be the resistance. As the results season is peaking, traders may have started unwinding their long positions, creating pressure on the Nifty.

Markets traded volatile in a narrow band and lost nearly half a percent, in continuation of Friday’s decline. After the flat start, the Nifty index oscillated in a range and finally settled around the day’s low to close at 19,672.35 levels. Most sectors traded in sync with the move and drifted lower wherein FMCG, metal and energy were among the top losers. Meanwhile, the broader indices showed resilience and ended almost flat to marginally higher.

It is a healthy correction as it would help in easing the overbought condition and we expect Nifty to respect the 19300-19500 zone during this phase. Traders should focus on managing their existing trades and accumulating quality stocks on dips. We feel the performance of the banking pack would play a critical role ahead.

Following today's flat opening, the Nifty was volatile throughout the day, concluding a negative close for the day. For investors, the market is buys on dips with a strict stop loss of 19500, and if the Nifty closes below the indicated level, we can expect more profit booking.

The market has traded Negative with the Sensex losing 0.45 percent and closed at 66384.78 and Nifty was down by 0.37 percent intraday and closed at 19672.35 levels whereas Bank Nifty was down by 0.33 percent and settled at 45923.05.

Among sectors Nifty Auto and Nifty Pharma and Nifty PSE ended in green while Nifty Metal, Nifty FMCG and Nifty Consumption ended on the lower side. In Nifty stocks, IndusInd Bank, M&M and Dr Reddy Labs were the top gainers while ITC, Kotak Mahindra Bank and Reliance were the prime laggards.

IndiaVIX was positive by 1.39 percent intraday and settled at 11.65.

Volume profile indicates Index has a strong support around 19550-19475 zone. Coming to the OI Data, on the call side, the highest OI observed at 19800 followed by 19900 strike prices while on the put side, the highest OI is at 19500 strike price. On the other hand, Bank nifty has support at 45400-45500 while resistance is placed at 46250-46370 levels.

The Nifty Bank is experiencing a tug-of-war between the bulls and the bears, resulting in a sideways movement. The option data indicates that call writers and put writers are actively participating at the 46000 strike price. This suggests that market participants are uncertain about the direction of the index, leading to a potential sideways momentum. If the index sustains below the 46200 mark, it may open the way for further downside movement towards the support zone of 45700-45000.

Markets fumbled for the second straight session due to profit taking in banking, FMCG, metals and oil & gas stocks. There is no pessimism as such in the markets but the normal correction which was pending for sometime, and with results from Infosys and Hindustan Unilever not coming on expected lines, investors are taking the opportunity to reduce their positions ahead of the key US FOMC policy outcome to be announced this Wednesday.

Technically, after a muted opening the Nifty is consistently facing selling pressure at higher levels. On intraday charts, the index held the lower top formation and on daily charts, it has formed a small bearish candle, which is largely negative. We are of the views that the index has completed a one leg of technical correction but a fresh uptrend rally is possible only after the dismissal of 19750. Below the same, the market could slip till 19600-19575. On the other side, above 19750 the index could rally till 19800-19835.

Volatility has re-emerged as initial Q1 results are below the expectations. Sector wise setbacks were experienced in IT and FMCG, unveiling weak demand and high input costs. Banks are mixed while Pharma stocks are withholding the volatility in anticipation of a better demand from developed economies, reduction in US pricing issues and expansion in operating margins. Investors are also watchful of the upcoming FOMC meeting, addressing rate hike and quantitative tightening measures, which could have an implication on FIIs inflows.

The bears currently have the upper hand in the market, and Nifty index is facing strong resistance at the 19800 level, where aggressive call writing is observed. This resistance zone has become a significant hurdle for the bulls. If the index sustains below the 19700 level, it may lead to further downside movement towards the support zone of 19600-19550, where the next support level is visible.

Given the current market conditions and volatility, traders should be cautious and utilize both the resistance and support levels to make trading decisions.

As expectations are getting reset in sync with the first quarter earnings that are underway, we witnessed profit booking post earnings and news flows today in heavy weights as well as financials. Investors need to be mindful of cuts in stock prices if eventual outcomes on earnings fail to match up with expectations.

The PSE Index however exhibited keen interest from participants as several of its constituents rose on the back of likely inclusion in the MSCI as well as new clean energy orders.

Indian rupee ended 13 paise higher at 81.82 per dollar on Monday versus Friday's close of 81.95.

benchmark indices ended lower on July 24 with Nifty below 19,700.

At close, the Sensex was down 299.48 points or 0.45% at 66,384.78, and the Nifty was down 72.70 points or 0.37% at 19,672.30. About 1731 shares advanced, 1873 shares declined, and 147 shares unchanged.

Top losers for the day on the Nifty were ITC, Kotak Mahindra Bank, Tech Mahindra, Reliance Industries and Britannia Industries, while gainers were IndusInd Bank, SBI Life Insurance, Dr Reddy's Laboratories, Bajaj Finserv and M&M.

On the sectoral front, FMCG index shed nearly 2 percent, and oil & gas, bank & metal fell 0.5 percent each. On the other hand, power and capital goods indices up 0.5 percent each.

The BSE Midcap index was up 0.3 percent, while Smallcap index ended on flat note.