Today’s Action:
Benchmark indices extended their losses, after breaching the key support level of 9,928 in yesterday’s session. Broader markets tanked, underperforming the headline indices.
Daily Market Review
The benchmark indices had yet another weak session in today’s trade. The key indices opened in red and sold off as the day progressed. The slide witnessed in today’s trading session can be attributed to technical weakness, as the market closed below a key support level of 9,928 yesterday. In today’s pre-market commentary, we had mentioned 9,780 as the next support level for the Nifty. The index, in today’s session, found support at this level before staging a minor bounce back.
Today, the Nifty opened lower at 9,872.85 and topped out at 9,892.65. The index started losing ground as the day progressed and reached an intraday low of 9,776.20, before finally settling at 9,820.25, down 0.89% from yesterday’s closing price. Similarly, the BSE Sensex, after opening lower at 31,750.73, hit an intraday high of 31,756.27. The selling pressure accentuated in the final hour of trade, as the index reached an intraday low of 31,422.80. The Sensex finally closed for the day at 31,531.33, down 266.51 points or 0.84% 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 119 stocks advanced, compared with 1,362 stocks declining, and 18 stocks remaining unchanged.
The broader markets underperformed the headline indices as the Nifty Midcap and Smallcap indices lost 3.20% and 4.62%, respectively, in today’s session.
Today, the MarketSmith India IND 47 Index, which lists the top 47 stocks in chart on fundamental characteristics, lost 3.91%.
On the sectoral front, barring the Nifty IT index which managed to advance 0.46%, all the other sectors ended in red. The Nifty Realty, Media, and Auto indices bore the maximum brunt of the market weakness, with declines of 5.07%, 3.45%, and 2.92%, respectively.
According to the Mid-Year Review tabled in Parliament today, the government’s capital expenditure is expected to increase 25% to INR 3.9 lakh crore by FY 2020, with the outlay for the defense sector alone jumping 22%. The government has budgeted for capital expenditure of INR 3,09,801 crore for the current fiscal year, which will increase to INR 3,41,000 crore in the next one, and to INR 3,90,000 crore in FY 2020. Defense expenditure, which accounts for about 30% of the government’s capital outlay, is set to rise from INR 91,580 crore in the current fiscal to INR 1,01,137 crore in the next one and INR 1,11,706 crore in 2019-2020.
With a multi-fold surge in gold imports from South Korea, the government is contemplating steps to check the shipments of the precious metal from the country. India had operationalised a free trade agreement with South Korea in 2010. Gold imports from South Korea have jumped to USD 338.60 million between July 1 and August 3 this year, compared with USD 70.46 million for the whole of FY 2017.
Yesterday, the Allahabad bench of the National Company Law Tribunal (NCLT) classified Jaypee Infratech as an insolvent company, after accepting IDBI Bank’s plea on the issue. As a result, the board of directors of the company has been suspended. The Tribunal will now appoint an insolvency resolution professional, who will sit with Jaypee’s creditors to see if a resolution of the company’s debt is possible. If not, then the Company’s assets will be liquidated.
With today’s heavy trading volume, both the Nifty and the Sensex have picked up a distribution day, reaching a count of 4.0 and 5.0, respectively. The key indices are now trading more than 3% off their respective highs. In view of the deteriorating technical set-up, we are changing the status of the market to “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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