Story of the Day
There are two main things happening today. Firstly, the nervousness about the election outcome is significant. We’ve been on an uphill trajectory since November 2023, and now, six months of gains are leading to a point where people are getting a bit nervous. The second factor is the broader Asian market weakness. While we attribute the recent market jitters to the upcoming election, it’s also a result of ongoing weakness in Asian markets. The Hang Seng has dropped by one and a half percent, and typically, emerging market funds tend to sell off similar markets together. The Japanese market also experienced a significant gap down, though it recovered somewhat during the day. This overall negative sentiment in Asian markets, combined with election nervousness, is weighing heavily on our markets.
Market Outlook
Looking at Nifty’s performance, in the short term, we’ve been in a downtrend for two days. On the hourly chart, the market appears extremely oversold, and it did recover over 100 points in the last hour today, suggesting we might have seen the bottom, at least until Monday. Tomorrow’s session (Friday) is the last one before the exit polls are released, so Monday will likely see a significant reaction based on these polls, with the actual results coming on Tuesday. This means that Monday could be the big day for market movements. Despite recent profit-taking, the market remains strong overall.
Nifty Next 50
Examining other benchmark indices, the Nifty Next 50 is gradually down, continuing in a short-term downtrend.
Nifty Mid and Small Cap
The Nifty Midcaps and Small Cap Index have also slipped, with midcaps down 400-500 points from their recent highs and small caps down about 3% from their peak. This level of profit-taking is not unusual.
Nifty Bank Overview
The Bank Nifty index, surprisingly, was in the green for most of the day, which is a good sign. As I often mention, watching Bank Nifty is crucial as its movements can indicate broader market trends. Today’s performance suggests it might not be heading down any further, which bodes well for the overall market.
Gold Chart
Gold has also been slipping. It recently dropped from 75,000 to around 71,750, reflecting pressure on precious metals and emerging markets due to a rising US dollar index and US ten-year bond yields.
FIIs & DIIs
Yesterday, FIIs were net sellers to the tune of 5800 crores, while DIIs bought almost an equivalent amount. This significant FII selling ahead of the election outcome is causing some nervousness in the market. We will see if today’s session continues this trend.
Nifty Heatmap
The heat map for Nifty Next 50 shows mostly red. ICICI Bank and Axis Bank were among the few that resisted the sell-off. Energy stocks like Reliance, ONGC, and Coal India sold off, along with consumer and auto stocks. FMCG stocks like Nestle and ITC also declined, and metals like Tata Steel and JSW Steel faced significant losses post-results. IT stocks, including Wipro and TCS, saw substantial declines, and pharma and power stocks also gave up ground. There was hardly any sector to hide in today.
Sectoral Overview
In terms of sectoral trends, nothing was green except private banking, which managed a slight 0.3% gain. Metals were hit hard with a 3% decline, and IT, energy, and real estate sectors also suffered significant losses. Profit-taking is evident in sectors that have had good gains ahead of the election results.
Sectors of the Day
Nifty Metal Index
The metal sector was the hardest hit today, down 3%, though in the context of the long-term trend, this is still a minor move. The sector’s long-term trend remains intact, and we may see support emerge after a couple more hundred points down.
Stocks of the Day
Mazagon Dock
Paytm stock has been moving up, hitting circuits in the last two sessions. Despite being significantly down from its 1900 level, it has shown some speculative interest lately. This is partly due to rumors about Adani taking a stake in Paytm, though the company has denied such moves. It could become a reasonable bet if it takes out the tops near 425, but for now, it’s more speculative.
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