Daily Big Picture – Nifty Tanks as North Korea Ups the Ante

Today’s Action:

Benchmark indices sold off in today’s session on account of escalating tensions in the Korean peninsula. Broader markets followed suit.

Daily Market Review

The Indian market had a weak opening, taking cues from the Asian markets after North Korea fired a missile early in the day, which flew over Japan and landed in Pacific waters about 1,180 kilometers off the northern region of Hokkaido. On account of the increased uncertainty in the Korean peninsula, U.S. stock futures, European and Asian share markets tumbled, as investors turned their focus to safe-haven assets such as gold. The Indian market too had no respite, as the Nifty and the Sensex lost further ground as the day progressed.

Today, the Nifty opened lower at 9,886.40. After topping out at 9,887.35, it was nearly a one-way journey for the index, as it touched an intraday low of 9,783.75. The index finally closed at 9,796.05, down 1.18% from yesterday’s close. Similarly, the BSE Sensex opened lower at 31,724.84. After hitting an intraday high of 31,739.80, the index sold off, reaching the lowest point of the day at 31,360.81. The index finally ended the day at 31,388.39, down 1.14% from yesterday’s close.

The market breadth, indicating the overall health of the market, was tilted towards the losers in today’s session. On the NSE, only 394 stocks advanced, compared with 1,103 stocks declining, and 37 stocks remaining unchanged.

The broader markets fell in line with the headline indices as the Nifty Midcap and Smallcap indices lost 1.12% and 1.29%, respectively, in today’s session.

Today, the MarketSmith India IND 47 Index, which lists the top 47 stocks in chart on fundamental characteristics, lost 0.94%.

On the sectoral front, none of the indices could eke out gains today. The Nifty Energy, Pharma, and PSU Bank indices bore the maximum brunt of today’s sell-off, with losses of 1.65%, 1.23%, and 1.20%, respectively.

Foreign institutional investors (FIIs) were net sellers in Indian equities for the 11th consecutive session on Monday as North Korea tensions escalated. They have also trimmed their exposure to other Asian countries. The FIIs dumped Indian shares to the tune of more than INR 13,500 crore in August, the highest monthly selling since November 2016.

The weakness in the market can also be attributed to a recent government dossier, which has listed nearly 17,000 firms as the main conduits for the circulation of slush money after the government’s demonetisation move last year. The government is set to launch a multi-agency crackdown on these companies including some listed investment advisory firms, realty businesses, hotels, grain mills, jewellery traders, and a few film production and media houses for funneling unaccounted money over the last several months.

NTPC fell close to 3% in today’s session on equity dilution by the government through the offer for sale route. The two-day stake sale in the country’s largest power generation company has opened for subscription today. The government has set a floor price of INR 168 per share for the sale, through which it intends to offload a 5% stake with a greenshoe option to sell an additional 5% stake.

Today, the Sensex escaped a distribution day on account of low trading volume, while the Nifty added one to its tally. The distribution day count for the Sensex and the Nifty now stand at 7.0 and 6.0, respectively. The Indian market is currently in Uptrend Under Pressure.

Current Outlook:

– Be cautious with any new purchases.

– Make a defensive game plan for your portfolio.

– Stay disciplined and exercise sound sell rules.

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