Daily Big Picture – The Nifty, Sensex hit new highs; Broader markets correct

MarketSmithIndia-WilliamOneilIndia

Today’s Action:

The Nifty and the Sensex make fresh high on volumes, higher than the previous session, to close above key levels of 9,600 and 31,000 respectively. However, the broader markets fell by 2%.

Daily Market Review

After opening on a dull note, the street gladly welcomed the news of the timely arrival of Southwest monsoon rains in India, reported by the India Meteorological Department. The Nifty and the Sensex increased to make another record high. The broader markets corrected by ~2% each and remain under pressure.

The Nifty began this week with a weak note, after opening at 9,560.05 or 0.37% down, however, it showed some signs of recovery by the afternoon session. Trimming the morning losses, the day ended at piecemeal gains of 0.10%. With a closing at 9604.90, the range observed for the day was 9,547.70 – 9,637.75.

A volatile beginning of the week was evident in the movement of the Sensex today.  The index opened on a negative note, and made a fresh high of 31,214.39, during the day. With an opening and closing seen at 30,944.38 and 31,109.28, respectively, the index closed at a gain of 0.26% or 81 points. The trading range of the day remained 30,869.90 – 31,214.39.

The up north movement in both the indices was supported by good volumes as compared to the previous session.

After two days of relief during the last week, the broader indices corrected heavily today, with the Nifty Midcap and Smallcap giving away 2.05% and 2.06% from their previous gains. With off highs accumulating to nearly 7%, they continue to remain under pressure.
The MarketSmith India IND 47 Index, which lists the top 47 stocks in chart and fundamental characteristics, lost 1.84% in today’s trading session, underperforming the benchmark.

Talking about the sectors, a majority of the sectors washed away their previous gains and closed in red. The only sectors to close in green were Nifty FMCG (1.82%), Auto (0.64%), Energy (0.40%) and Financial Services (0.10). The top three underperforming sectors of the day were Nifty Realty (-4.39%), Pharma (-3.63%) and PSU Banks (-2.45%).

At a symposium held recently in Singapore, President of the Federal Reserve Bank of San Francisco stated that the U.S. Federal Reserve would likely hike the interest rates two more times over the next seven months in 2017.

The Chinese economy is showing early signs of a slowdown. Standard Chartered Plc’s Chinese Small and Medium Enterprise Confidence Index trended down for the second consecutive month in May, falling to 56.9 from 58 in April. The S&P Global Platts China Steel Sentiment Index decreased to 33.1 in May compared to 45.1 in April, owing to a weak demand outlook for steel.

Recently, Moody’s credit rating agency, downgraded China’s sovereign debt for the first time since 1989. The Chinese sovereign debt was downgraded to A1 from Aa3. The agency cited the second largest economy’s slowing growth rate and increasing debt burden as reasons for the downgrade.

The Indian market outlook stays at Confirmed Uptrend as the Nifty and the Sensex are trading at all-time highs. The distribution day count stands at 1.0 and 4.0, for the Nifty and the Sensex, respectively.

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