Ahead of Market: 10 things that will decide stock market action on Wednesday
Indian equities extended their decline on Tuesday, with Sensex falling 555 points and Nifty ending below 23,650. Analysts cited elevated crude prices, Fed rate hike concerns and IPO fund absorption, while technical signals suggested 23,600 as key ...
By Debaroti Adhikary, ETMarkets.com |
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The Indian stock market extended losses on Tuesday, with Sensex and Nifty closing lower as elevated crude oil prices, Fed rate hike worries, booming IPO market and other factors continue to contribute to the slow grind down in the market.
Sensex dropped around 555 points to end the session at 75,578 while Nifty 50 lost 144 points to close at 23,635. Broader markets however closed in the green, with Nifty Midcap 100 and Nifty Smallcap 100 rising up to 0.2%.
Here's how analysts read the market pulse
The market is now in the fifth week of a slow but steady downtrend, VK Vijayakumar, Chief Investment Strategist at Geojit Investments, noted. He added that elevated crude prices, selling in IT stocks, fears of a Fed rate hike this month and a booming IPO market which is sucking lots of money have contributed to this slow grind down in the market.
“Since the macro construct which contributed to this downtrend persists, it is possible that the downtrend may continue in the near-term. But this trend is opening up opportunities for investors in large-caps which continue to remain weak despite improving fundamentals,” the analyst said.
A major factor contributing to the weakness of the large-caps despite their attractive valuations is that bulk of the steady monthly SIP inflows are going to the mid-and small-cap segments despite their elevated valuations, Vijayakumar pointed out, adding that a reversion to mean is overdue in the mid-and small-cap segments.
“This can facilitate a rally in fundamentally sound large-caps. The timing of this transition is hard to predict. But this is likely by this month-end when the mega IPOs of NSE and Jio are completed and refunds from the IPOs come back to investors. Instead of trying to time the market, investors can think about changing the weightage of portfolios towards large-caps where the risk-reward is favourable,” he concluded.
US stocks
U.S. stocks fell on Tuesday morning, as attacks on energy facilities around the Gulf pushed oil to near $100 a barrel.
All three major U.S. indices were trading lower after a long holiday weekend, with the Dow Jones Industrial Average dropping 1.21% in the first hour. The S&P 500 dropped 0.49% and the Nasdaq Composite fell 0.52%.
Brent crude oil spiked 1.32% to $98.28 per barrel, its highest level in six weeks, while U.S. crude rose 2.11% to $93.40 a barrel. The increase came after Yemen's Iranian-backed Houthis attacked energy facilities and cities in Saudi Arabia, highlighting the risk of the conflict spreading throughout the region and further complicating the supply of fuel to world markets.
European & global markets
The European Central Bank is all but certain to raise euro zone rates by a quarter point on Thursday this week, while the chances of the Bank of Japan doing the same next week are intensifying, which has set the yen on course for its strongest rally in two years.
Equity markets in Europe slipped, leaving the STOXX 600 down 0.2%. MSCI's gauge of stocks across the globe was last down 0.49%.
Tech view
Nifty 50 slipped again as rising crude oil prices are expected to put inflationary pressure, said Rupak De, Senior Technical Analyst at LKP Securities. He noted that the benchmark index found initial support near the previous swing low. In addition, on the daily timeframe, the RSI is showing a positive divergence, suggesting a potential shift in momentum.
“Going forward, 23,600 is likely to act as a crucial support for the Nifty. If the index holds above 23,600, we may see a decent recovery, which could take the Nifty towards 24,000 and higher in the short term,” he added.
Most active stocks in terms of turnover
IFCI (Rs 2,062 crore), GE T&D India (Rs 2,012 crore), ICICI Bank (Rs 1,701 crore), Data Patterns (Rs 1,406 crore), HDFC Bank (Rs 1,401 crore), Hindustan Copper (Rs 1,320 crore), and HAL (Rs 1,283 crore) were among the most active stocks on NSE in value terms. Higher activity in a counter in value terms can help identify the counters with the highest trading turnovers in the day.
Most active stocks in volume terms
Vodafone Idea (Traded shares: 35.59 crore), IFCI (Traded shares: 21.74 crore), IDBI Bank (Traded shares: 6.91 crore), New India Assurance Company (Traded shares: 4.53 crore), Yes Bank (Traded shares: 3.86 crore), Pine Labs (Traded shares: 3.83 crore) and JP Power (Traded shares: 3.14 crore) were among the most actively traded stocks in volume terms on NSE.
Stocks showing buying interest
GE T&D India, Data Patterns, PVR Inox, Finolex Cables, Jain Resource Recycling, Jubilant Life and Neuland Labs were among the stocks that witnessed strong buying interest from market participants.
52-week high
Among the ones which hit their 52-week highs on NSE included Neuland Labs, Sai Life Science, Laurus Labs, Piramal Pharma, Divis Labs, Solar Industries and Jyoti CNC Automation.
Stocks seeing selling pressure.
Stocks which witnessed significant selling pressure were New India Assurance Company, IDBI Bank, IFCI, Pfizer, HEG, Afcons Infrastructure and IIFL Finance.
52-week low
Among the ones which hit their 52-week lows on NSE included Pfizer, United Breweries, SBI Life, Voltas, IndiaMART, ICICI Lombard and Dabur India.
Sentiment meter favours bears
Out of the 3,648 stocks that traded on the NSE on September 8, Tuesday, 1,711 stocks witnessed advances, 1,833 saw declines while 104 stocks remained unchanged.
(Disclosure: "This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The EconomicTimes Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment.")
Sensex dropped around 555 points to end the session at 75,578 while Nifty 50 lost 144 points to close at 23,635. Broader markets however closed in the green, with Nifty Midcap 100 and Nifty Smallcap 100 rising up to 0.2%.
Here's how analysts read the market pulse
The market is now in the fifth week of a slow but steady downtrend, VK Vijayakumar, Chief Investment Strategist at Geojit Investments, noted. He added that elevated crude prices, selling in IT stocks, fears of a Fed rate hike this month and a booming IPO market which is sucking lots of money have contributed to this slow grind down in the market.
“Since the macro construct which contributed to this downtrend persists, it is possible that the downtrend may continue in the near-term. But this trend is opening up opportunities for investors in large-caps which continue to remain weak despite improving fundamentals,” the analyst said.
A major factor contributing to the weakness of the large-caps despite their attractive valuations is that bulk of the steady monthly SIP inflows are going to the mid-and small-cap segments despite their elevated valuations, Vijayakumar pointed out, adding that a reversion to mean is overdue in the mid-and small-cap segments.
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“This can facilitate a rally in fundamentally sound large-caps. The timing of this transition is hard to predict. But this is likely by this month-end when the mega IPOs of NSE and Jio are completed and refunds from the IPOs come back to investors. Instead of trying to time the market, investors can think about changing the weightage of portfolios towards large-caps where the risk-reward is favourable,” he concluded.
US stocks
U.S. stocks fell on Tuesday morning, as attacks on energy facilities around the Gulf pushed oil to near $100 a barrel.
All three major U.S. indices were trading lower after a long holiday weekend, with the Dow Jones Industrial Average dropping 1.21% in the first hour. The S&P 500 dropped 0.49% and the Nasdaq Composite fell 0.52%.
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Brent crude oil spiked 1.32% to $98.28 per barrel, its highest level in six weeks, while U.S. crude rose 2.11% to $93.40 a barrel. The increase came after Yemen's Iranian-backed Houthis attacked energy facilities and cities in Saudi Arabia, highlighting the risk of the conflict spreading throughout the region and further complicating the supply of fuel to world markets.
European & global markets
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The European Central Bank is all but certain to raise euro zone rates by a quarter point on Thursday this week, while the chances of the Bank of Japan doing the same next week are intensifying, which has set the yen on course for its strongest rally in two years.
Equity markets in Europe slipped, leaving the STOXX 600 down 0.2%. MSCI's gauge of stocks across the globe was last down 0.49%.
Tech view
Nifty 50 slipped again as rising crude oil prices are expected to put inflationary pressure, said Rupak De, Senior Technical Analyst at LKP Securities. He noted that the benchmark index found initial support near the previous swing low. In addition, on the daily timeframe, the RSI is showing a positive divergence, suggesting a potential shift in momentum.
“Going forward, 23,600 is likely to act as a crucial support for the Nifty. If the index holds above 23,600, we may see a decent recovery, which could take the Nifty towards 24,000 and higher in the short term,” he added.
Most active stocks in terms of turnover
IFCI (Rs 2,062 crore), GE T&D India (Rs 2,012 crore), ICICI Bank (Rs 1,701 crore), Data Patterns (Rs 1,406 crore), HDFC Bank (Rs 1,401 crore), Hindustan Copper (Rs 1,320 crore), and HAL (Rs 1,283 crore) were among the most active stocks on NSE in value terms. Higher activity in a counter in value terms can help identify the counters with the highest trading turnovers in the day.
Most active stocks in volume terms
Vodafone Idea (Traded shares: 35.59 crore), IFCI (Traded shares: 21.74 crore), IDBI Bank (Traded shares: 6.91 crore), New India Assurance Company (Traded shares: 4.53 crore), Yes Bank (Traded shares: 3.86 crore), Pine Labs (Traded shares: 3.83 crore) and JP Power (Traded shares: 3.14 crore) were among the most actively traded stocks in volume terms on NSE.
Stocks showing buying interest
GE T&D India, Data Patterns, PVR Inox, Finolex Cables, Jain Resource Recycling, Jubilant Life and Neuland Labs were among the stocks that witnessed strong buying interest from market participants.
52-week high
Among the ones which hit their 52-week highs on NSE included Neuland Labs, Sai Life Science, Laurus Labs, Piramal Pharma, Divis Labs, Solar Industries and Jyoti CNC Automation.
Stocks seeing selling pressure.
Stocks which witnessed significant selling pressure were New India Assurance Company, IDBI Bank, IFCI, Pfizer, HEG, Afcons Infrastructure and IIFL Finance.
52-week low
Among the ones which hit their 52-week lows on NSE included Pfizer, United Breweries, SBI Life, Voltas, IndiaMART, ICICI Lombard and Dabur India.
Sentiment meter favours bears
Out of the 3,648 stocks that traded on the NSE on September 8, Tuesday, 1,711 stocks witnessed advances, 1,833 saw declines while 104 stocks remained unchanged.
(Disclosure: "This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The EconomicTimes Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment.")
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