Daily Big Picture – Markets End their Seven-day Winning Streak; PSU Bank Stocks Drag Market

Today’s Action

 Benchmark indices ends their seven day rally. Nifty, -0.1%, Sensex, -0.1%, Model Portfolio, +0.6%; MSI Ind 47, -0.2%.

Daily Market Review

 Markets ended in the red after a seven gain days. The U.S. Fed hiked interest rates by 25 bps, its fourth such hike this year and indicated that there would be two more rate hikes in 2019.   

 On the sectoral front, there was a mixed reaction. Nifty Pharma (+0.3%) and Nifty Auto (+0.2%) gained the most, while Nifty PSU Bank (-1.8%) declined the greatest. Yes Bank (+4.0%) and Hindustan Petroleum (+3.5%) were the major gainers whereas Grasim Industries (-3.1%) and State Bank of India (-2.2%) were the losers among the Nifty50 stocks.

 The Nifty Midcap and Smallcap were up 0.1% and 0.4% respectively.

The advance-decline ratio was in favor of decliners. Of the 2,062 stocks traded on the NSE, 829 advanced, 883 declined, and 350 remained unchanged.

Yesterday, we moved the market status to a {Confirmed Uptrend} as the Nifty reclaimed the 10,942 level (market’s high before it was downgraded to an Uptrend Under Pressure). A follow-through day in the next few sessions will strengthen the current uptrend. We would like to see multiple high-quality stocks breakout from their pivot points and make new highs. For now, we recommend investors to stay selective and buy only high-quality growth ideas that are exhibiting strong relative strength compared with the market.

Though the Nifty has been moved to a Confirmed Uptrend, Nifty 500 and Nifty Smallcap are still in a Rally Attempt. It should be noted that the last time we changed the market status to a Confirmed Uptrend, the  Nifty 500 index was in a Rally Attempt then as well. Therefore, we would advise caution until the broader indices move to a Confirmed Uptrend.

Stocks in News

 Oil and Natural Gas Corporation Ltd: The Company’s board approved share buyback of 25.29 crore scrips (1.9% of total equity) at Rs 159 apiece. This comes after share buyback of Indian Oil Corporation Ltd for about Rs 4,435 crore. The government is aiming to raise capital by participating in these buybacks to achieve its fiscal target of 3.3% for FY 2019. The stock was up 2.3% today.

Reliance Communications: Rcom and Jio officials met Department of Telecom authorities to resolve issues with the deal. Rcom is expected to garner Rs 975 crore from the spectrum sale. The stock was 0.7% today.

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