Daily Big Picture – Rising Crude Oil Drags Nifty Below 50-DMA

Today’s Action:

Frontline indices record sharp losses; broader market faces intense selling.

Daily Market Review:

Major indices dived lower as rising crude oil prices and weakening rupee dampened investor sentiment.

Despite weak global cues, the Indian market opened on a flat note and nudged higher in the morning trade. However, frontline indices erased their gains amid rising crude oil prices.

Brent crude oil prices rose 0.5% to $76.67 per barrel after its yesterday’s gain of 2%. The steep increase in prices followed the U.S. State Department’s recent announcement to cut oil imports from Iran. The Indian rupee declined by 30 paise to hit a 19-month low of Rs 68.54.  

In the end, India’s major indices fell to their lowest level in three weeks. The Nifty dropped 0.9% and breached its crucial support of 50-DMA. The 30-pack Sensex was down 0.8% and closed marginally above its 50-DMA.

Volumes were higher on the Nifty compared to yesterday’s session, resulting in a distribution day. However, the Sensex escaped the brunt of distribution as volume was marginally lower.

Selling pressure was intense in the broader market, as the Nifty Midcap and Smallcap tumbled 1.5% and 2.3%, respectively.

Losers led winners by a huge margin of 11:2 on NSE.

Barring few, most sector indices were in a negative territory. PSU Banks and Media stocks were the most affected, losing 2.4% and 2.1%, respectively.

MarketSmith India IND 47 index, our proprietary list of top 47 stocks in chart and fundamental characteristics, lost 2.3%.

Talking about market direction, the distribution day count remains unchanged at three on the Nifty and four on the Sensex. While the Nifty added one distribution day today, the May 23 distribution day fell off the count due to age.

While both the key indices are only 3.5-4.5% away from their all-time highs, the Nifty Midcap and Smallcap have corrected 17% and 26% from their 52-week highs. The Nifty Smallcap breached its June 6 low of 7,224 and closed 1% below it. The index is now in a Downtrend. The Nifty Midcap continues to be in a Rally Attempt, as the index managed to trade above its June 5 low of 18,033.55.

For the Nifty, the previous high of 10,929.20 serves as a crucial resistance zone. With the index falling below its 50-day line, the next level of strong support is around 10,550.

Current Outlook:

– Be cautious with new purchases.

– Form a defensive game plan for your portfolio.

– Stay disciplined and exercise sound sell rules.

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