Daily Big Picture – IT Stocks Drag Benchmark Indices; Nifty Adds Distribution Day

Today’s Action

Benchmark indices closed lower for the second consecutive session. Nifty, -0.5%, Sensex, -0.8%, Model Portfolio, -0.8%.; MSI Ind 47, -0.6%.

Daily Market Review

India’s benchmark indices continued to slide for the second day in a row accompanied by weak global cues, ICRA report on easing GDP growth, and FII selling. Moreover, India’s crude import rose 10.5% in October, the highest in the last seven years also dampened investors’ sentiment.  

Nifty IT (-2.8%) was the biggest loser and weighed on frontline indices, led by Tata Consultancy Svs. (-3.5%), Infosys (-3.5%), and Tech Mahindra(-2.7%). Among others, Nifty Metal (-0.8%) and Media (-0.6%) also contributed for the losing cause.

However, Nifty Pharma (+1.7%) came to the rescue well supported by Dr Reddys Laboratories (+6.9%) after getting the nod for sale of generic Suboxone. Another pharma stock Wockhardt (+3.4%) also gained momentum.

Despite the weakness, the broader market seems resilient as both Nifty Midcap and Smallcap each gained 0.5%.

The selling pressure was intense on the Nifty and volumes came in higher than the previous day, resulting in a distribution day. With that, the distribution count now stands at two on the Nifty. The market remains unchanged at a Confirmed Uptrend. We would suggest investors to track fundamentally strong stocks trading above their 50- and 200-DMA and take positions on strong breakouts. Investors should begin with a smaller allocation and increase it gradually as market displays positive signals like additional follow-through days.

The advance-decline ratio was in favor of gainers. Of the 2,061 stocks traded on the NSE, 880 gained, 831 declined, and 350 remained unchanged.

Stocks in News

Adani Gas gained 20% today as the Company expanded its pan-India presence by bagging 13 city gas distribution (CGD) projects. In addition, it also owns 9 geographical areas in its JV with Indian Oil Corporation.

Dewan Housing Finance was up 4.2% today. The Company reported its Q2 results today. Its net profit grew 52.55% y/y to Rs 438.7 crore despite higher provisions. NIM contracted to 3.15% compared with 3.44% in Q1.

Action in Leading Stocks

Leaders Up on Volume: Phillips Carbon Black (+8.9%), Dr Reddys Laboratories (+6.9%), and Newgen Software Techs (+1.9%)

Leaders Down on Volume: Radico Khaitan (-4.3%), Vip Industries (-2.3%), and Fine Organic Inds (-0.7%)

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