A morning walk down Dalal Street | Sentiment likely to remain weak if Nifty remains below 10,880 levels

A terrible Tuesday for D-Street as Nifty turn negative for the year 2019 as Nifty closed below 10862 which was the level recorded on December 31.

Nifty Bank Turns Negative For 2019, all its constituents end in the red. Nifty Bank falls 723 points, biggest single-day fall in 2 months.

Sensex and Nifty50 slipped below crucial support levels. The S&P BSE Sensex suffered a loss of more than 640 points, below 37000 while Nifty50 also saw a cut of 185 points to close at 10,81L7.

The selloff in equities dragged the cumulative market capitalisation of BSE-listed firms to Rs 1,39,70,356.22 crore on September 17 from Rs 1,42,08,049.05 crore in the previous session, making investors poorer by Rs 2.38 lakh crore in a day. In the last two sessions, investors have lost about Rs 2.73 lakh crore.

The index managed to hold on to crucial support at 10800 levels on a closing basis which is a heartening sign. But, the fate of Indian markets could be decided by the outcome of the FOMC meeting as well as meeting of Saudi ministers later on Tuesday.

What led to the decline in Indian markets?

Well, on Monday we saw buying coming in at lower levels which helped the index close above 11000 levels which was a bullish sign but things got slightly complex on Tuesday as reports suggest that FOMC could rethink on the rate cut.

Rupee also depreciated against the US Dollar. The Indian rupee on September 17 weakened by another 18 paise to settle at 71.78 against the US dollar as investors fretted over higher crude oil prices.

Volatility Index Surges Over 7% To Close Above The Level Of 16

The sharp rise in crude oil prices has impacted domestic sentiments due to India’s high dependence on imports.

In the near term, the GST meet scheduled on 20th September would be on investors radar as expectations of GST rate cut are high, especially for the auto sector.

On the institutional front, FPIs were net sellers in Indian markets for Rs 808 cr, while DIIs were net buyers to the tune of Rs 85 cr, provisional data showed.

Big News:

Media reports suggest that the finance ministry is working on one more booster dose to give a leg-up to the economy that has hit over the six-year low of 5 percent, a senior finance ministry official said.

The blueprint for the stimulus is ready that would be announced by Finance Minister Nirmala Sitharaman in the next few days, the official said without giving further details.

The government announced a slew of measures in three dosages which include a special window for real estate, export incentives, bank consolidation and sops for micro, small and medium enterprises (MSMEs) and the automobile sector.

Earlier this week, RBI Governor Shaktikanta Das had said the government has taken a number of measures to boost the economy in three phases and indicated that more steps are likely.

Technical View:

Nifty50 forms a Bearish Belt Hold kind of pattern on charts

Experts expect sentiment to remain weak and if the index remains below 10,880 levels, then the weakness could continue in coming sessions.

Positional traders with high-risk appetite are advised to create short positions and on rallies, if any, towards 11,000 mark, with a stop loss above 11,100 on closing basis look for much bigger targets on downsides below 10,637 levels, suggest experts.

Three levels: 10796, 11000, 11150

Max Call OI: 11200, 11300

Max Put OI: 10800, 10600

Stocks in news:

As a part its strategy to cut its financial liabilities and focus on the domestic market, Tata Power on September 17 announced exit from its investment in Cennergi, a South African joint venture for USD 106 million.

State-owned hydropower giant NHPC on September 17 said its board has approved a proposal to raise up to Rs 2,500 crore through bonds, loans or external commercial borrowings (ECBs).

The Pollution Control Board, Assam has slapped a fine of Rs 2.05 crore on PSU firm Oil and Natural Gas Corporation (ONGC) for allegedly violating an order by the Supreme Court and causing pollution to the environment.

Technical Recommendations:

We spoke to SMC Global Securities Ltd and here’s what they have to recommend:

Finolex Industries: Buy| Target: Rs 580| Stop Loss: Rs 500| Upside 9%

Axis Bank: Sell| Target: Rs 604| Stop Loss: Rs 670| Downside 7%

Infosys: Buy| Target: Rs 870| Stop Loss: Rs 785| Upside 6%

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