Nifty ends the day below 19,400, buy-on-dips pushes Sensex close to 65,250
Banks, IT, and financial services stocks and realty's falling sequential revenue were the largest drags. Healthcare and media stocks bought.
Money Poise
On August 3rd, Indian stocks remained under pressure as negative global cues weighed on investor sentiment. Broader markets, which had shown some resilience in the morning, also capitulated to the selling onslaught. Later in the day, investors once again purchased into price drops.
Analysts also noted that the mood in the domestic market was disturbed by prolonged FII selling, which was driven by a spike in US bond yields. Real estate, which has seen sequential revenue decline, joined banks, IT, and financial services stocks as some of the largest laggards. The media and healthcare sectors both saw buying activity.
As of the close of trading, the Nifty 50 index had dropped by 144.90 points, or 0.74 percent, to 19,381.65. Down 0.82 percent, or 542.10 points, the Sensex of the Bombay Stock Exchange ended the day at 65,240.68.
Sun Pharma and Adani Enterprises, both of which are members of the prestigious Nifty 50 index and are scheduled to release earnings later in the day, were among the day's top gainers. The most percentage declines from the index were seen by ONGC, Titan, and Bajaj Finserv.
Nifty Midcap 100 and Nifty Smallcap 100 both ended the day up, demonstrating the market's broad strength.
Among industry indexes, Nifty Pharma saw the largest increase in value. In addition to the Dow and the S&P 500, several sectors have shown gains today, including the Media, Healthcare, and Auto sectors. The worst performing sector was Nifty Metal, followed by the Nifty Bank and the Nifty IT.
“Tepid earnings, particularly, from the IT pack have been hurting the market mood, while dampening sentiments are the benchmark 10-year US Treasury bond yield which have climbed to its highest level since November above 4.1,” said Prashanth Tapse, Senior VP (Research), Mehta Equities, earlier in the day.
Global equities
Poor sentiment on Dalal Street might be traced back to sluggish Asian trade. Stocks in Asia fell as investors waited nervously to see if Apple and Amazon's earnings justified the tech sector's sky-high valuations, which had been fueled in part by rising US bond yields.
Despite yesterday's steep decline of 2.3 percent, Asia's broadest stock index, as measured by MSCI, dipped just 0.2 percent today. That was compared to a monthly increase of 5.4% in July.
Futures for the EUROSTOXX 50 were down 0.1 percent while the FTSE Futures Index was up 0.2 percent, suggesting a muted start for Europe. A rate hike by the Bank of England is widely anticipated for the afternoon.
FII selling
Short-term sentiment was dampened on August 2 by Rs 1,877.84 crore in net equity sales by foreign institutional investors (FIIs). This follows several months of consistent influxes. Many analysts, though, feel the selling is temporary and that the market's overall momentum is still favourable.
Technical view
Technically speaking, Nifty has recovered from its lows and protected its key support, but the momentum has been halted. According to market analysts, the bearish gap between 19,678 and 19,704 is likely to act as the immediate hurdle, followed by 19,800 in the same time period. On the upside, a series of supports could be seen beginning at 19,500, continuing through 19,400, and ending at 19,300.
"Going forward, we need to keep a close eye on the worldwide bourses, particularly the US markets, and their reactions to worries of fiscal deterioration, as these concerns could steer the near-term trajectory for worldwide markets. Primarily the structure remains robust and such corrections in a bullish market are regarded to be good. Sameet Chavan, Head Research, Technical and Derivatives, Angel One, has stated that the company should refrain from making any aggressive transactions till the market has stabilised.
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