Daily Big Picture – Financials Weigh on Benchmark Indices; Broader Markets Underperform Key Composites

DailyBigPicture-MarketSmithIndia-WilliamOneilIndiaToday’s Action:

The benchmark indices extend losses from yesterday’s session. The Nifty Midcap and Smallcap indices correct over 1%.

Daily Market Review

The benchmark indices witnessed selling pressure right from the start of today’s session. After starting in the negative zone, the key indices sunk deeper to erase all gains recorded in the first two sessions of the week.

Today, the Nifty opened lower at 10,132.40, which was also the day’s high. The index extended losses as the day progressed to hit an intraday low of 9,999.25. However, the index managed to hold the 10K mark and settled at 10,013.65, down 0.67% from yesterday’s closing price. Similarly, the BSE Sensex, after opening higher at the day’s high of 32,511.19, touched an intraday low of 32,195.91 in the second half of the session. The index closed for the day at 32,237.88, down 238.86 points or 0.74% from yesterday’s close.

The market breadth, indicating the overall health of the market, was heavily weighed towards the losers in today’s session. On the NSE, 1,202 stocks declined, compared with 455 stocks advancing, and 310 stocks remaining unchanged.

The broader markets underperformed the key indices as the Nifty Midcap and Smallcap indices cracked 1.08% and 1.04%, respectively.

Today, the MarketSmith India IND 47 Index, which lists the top 47 stocks in chart on fundamental characteristics, recorded a sharp decline of 0.97%.

On the sectoral front, the Nifty Energy index was the lone gainer with an increment of 1.22%, in today’s session. On the negative end, financials, pharma, and metal stocks were the most battered. The Nifty PSU Bank, Metal, and Bank indices were down 2.89%, 1.91%, and 1.52%, respectively, by the close of trading.

In macro news, India’s woes of an economic slowdown are reflected yet again in July’s services PMI data. In the data released earlier today, Nikkei India Services PMI Business Activity Index plunged to a four-year low of 45.9 in July 2017, as compared to 53.1 in June 2017. The latest data hints at deteriorating business activity in the services sector following the launch of the GST reform. Lack of knowledge and clarity on the tax reform restricted growth across the sectors.

In the stock talk, earnings announcements continued to flow in with largely positive results reported for Q1 FY 2018. Indian Oil Corporation, Colgate Palmolive, Titan Company, and Bata India reported better than expected earnings. IOC reported a net profit decline of 45% for Q1 FY 2018, with a profit margin of 7.6% during the quarter. The numbers beat the consensus estimates comfortably. Colgate Palmolive, a leader in the toothpaste segment, reported a net profit growth of 8.5% on good operational performance.

Both the key indices recorded distribution days in today’s session owing to high trading volume. The Sensex marked the second consecutive distribution day, today. The revised distribution day count for the Sensex and the Nifty stands at 4.0 and 2.0, respectively. The indices are currently over 1% off their all-time highs. The sudden sloppy movement of the key indices is a threat to the market status which is in a Confirmed Uptrend.

Current Outlook:

– Market environment conducive for new purchases, but remain selective.

– Focus on fundamentally strong stocks breaking out of strong technical patterns.

– Stay disciplined and exercise sound buy and sell rules.

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