Where is the market headed?
The technology sector is facing fresh regulatory pressure following actions by the U.S. administration surrounding the H1B visa system, impacting global IT companies beyond just those based in India. Cognizant was pulled up regarding its permanent labor certification filings, triggering a ripple effect across Indian stock market heavyweights including Infosys, Wipro, and TCS.
The IT index continues to suffer under a double whammy of structural headwinds: the relentless momentum of the AI movement and the tightening of U.S. visa access for foreign workers. Further downside potential remains before any clear recovery can take shape.
When attempting to evaluate beaten-down stocks, market strategy suggests patience rather than trying to catch falling knives and giving up good capital after bad. Investors should wait for assets to move above their 200-day moving average or establish a clear pattern of higher highs and higher lows on price charts. Applying basic chart knowledge can help navigate these downturns safely.
Market Overview
When attempting to evaluate beaten-down stocks, market strategy suggests patience rather than trying to catch falling knives and giving up good capital after bad. Investors should wait for assets to move above their 200-day moving average or establish a clear pattern of higher highs and higher lows on price charts. Applying basic chart knowledge can help navigate these downturns safely.
Major Market indices
Broader equity markets also continue to face unabated selling pressure. The Nifty recorded its fifth consecutive red daily candle, falling by another 0.86%. Over the past six weeks, the index has plunged from nearly 25,000 to approximately 23,400. A small price gap remains around the 23,100 level, which may serve as a potential stopping point, though the overall market trend remains sharply downward and negative for now.
Unlike prior sessions where mid-cap and small-cap segments bucked the broader trend, widespread weakness was evident across all market segments today. Both mid-cap and small-cap indices fell by approximately half a percent. While Nifty Next 50 saw relatively mild pressure, Bank Nifty dropped by 0.85%.
Heat Maps
Major cuts hit heavyweights such as HDFC Bank, ICICI Bank, Hindustan Unilever, ITC, Bharti Airtel, Reliance, HDFC Life, and Kotak Bank, with gains restricted to sporadic commodity, metal, and Adani group stocks. Meanwhile, crude oil is approaching $100 once again, raising concerns over spiraling energy costs.
Trading activity within the Nifty 500 remained highly stock-specific. Graphite India emerged unexpectedly with the day’s largest turnover, surging 15%. Other high-turnover names included HDFC Bank, Coforge, ICICI Bank, and Adani Enterprises.
Paytm showed momentum challenging its previous highs, while Chennai Petro gained 10% and MRPL rose 6.6%. Coal India, Tata Steel, Pine Labs, and Swiggy also posted strong performances. Conversely, IFCI and BSE declined for a second straight session, impacted by market rumors suggesting the upcoming NSE IPO price band will be fixed near 1,700, significantly below participant expectations of 2,000 to 2,100, serving as a sentiment dampener.
Advance/Decline Trend
Market breadth heavily favored declines, with only 156 stocks advancing compared to 339 declining within the top 500 universe.
Sectoral Overview
Sectorally, IT led the losses with a 3.2% drop, while real estate fell 2.23% as Indian bond yields reached long-term highs. Both sectors severely dragged down indices, alongside capital markets, financial services, general services, and defense, which all declined by 1% or more.
Nifty Metals was the sole bright spot, gaining 1.79%. Technical charts for the IT index show a series of lower bottoms; after failing to cross previous resistance levels, the sector is pulling back toward its recent bottom for key support unless previous highs are taken out soon.
Sector of the Day
Nifty IT Index
U.S. Market Update
In international markets, U.S. indices traded lower in the previous session following a one-day break. The Dow Jones dropped 1.18%, and the S&P 500 lost over 0.5%. However, the Nasdaq was insulated by AI-linked momentum, with names like CoreWeave, Lumentum, Intel, Nebius, and Seagate surging between 6% and 11%.
On the downside, Amgen plunged 10%, while Shopify, Astera Labs, Booking Holdings, and Thomson Reuters experienced notable sell-offs – some of which align with U.S. weekend investing strategies. Mega-cap tech stocks including Microsoft, Amazon, Walmart, Costco, Meta, Apple, and Nvidia ended in the red, Google traded flat, while SpaceX, Tesla, Lam Research, and Applied Materials managed gains as capital continues to concentrate in narrow market pockets.
Tweet Of The Day
A notable macro development involves India’s Foreign Currency Non-Resident (FCNR) scheme, which attracted approximately $135 billion in U.S. dollar deposits after incentives allowed NRI investors to leverage heavily. Announced on June 5th when the USD/INR exchange rate was at 95.2, the scheme has not led to rupee appreciation over the past three months, with the exchange rate hovering at 95.2.
This mechanism effectively postpones structural pressure. As these three-year deposits mature, potential currency depreciation toward 110 (assuming a conservative 4% to 5% annual rate) could force the government and taxpayers to absorb significant exchange losses while NRI investors profit. Beyond buying temporary time, the decision has not provided structural benefit to the domestic currency, which appears set to resume its depreciating trend.
