The law of averages appear to be finally catching up with the gravity-defying rally seen by the Nifty and if not by the index, some of its sectors for sure. From the 22,124 top it made on January 16, the Nifty 50 is already down nearly 900 points in the next five sessions.
Tuesday’s session, the first of this truncated week, which also happens to be the F&O expiry of the January series, saw almost all the high-flying sectors, including PSUs correct between 5% and 10%, some even more. Tuesday’s pain in the broader market led to erosion of ₹8 lakh crore in investor wealth. From the F&O series expiry to a potential stimulus in China, read about the five factors that led to the market fall on Tuesday.
As of Tuesday, the Nifty is down 2.3% for the month of January, putting it on course for its fifth straight year in which it has delivered negative returns in the first month of the year. Among key levels to watch, a 38.2% retracement level of the rally from October to the January 16 top, comes to 20,900 on the downside.
“The markets are quite euphoric with several factors saying that India is the place to be and there is no other alternative. So the market is likely to go down to much lower levels. The support levels for the Nifty come in at about 20,900 and 20,700,” said Jai Bala of cashthechaos.com. For a longer timeframe, Bala is working with a target of 18,800 for the Nifty 50 index.
The short-term texture of the market is weak but oversold, said Shrikant Chouhan of Kotak Securities. He said that 21,350 will be the key level for the Nifty and as long as it remains below those levels, the weakness may continue towards 21,100 or even 21,000. Only a break above 21,350 can take the index back to 21,425 levels.
Rupak De of LKP Securities said that the bearish sentiment on the Nifty appears to be strengthening as the Nifty closed below its previous swing low of 21,285. Below 21,200, De expects the index to fall towards 21,000 and even lower. “The market may continue to be a sell-on-rise market as long as the Nifty is below 21,500,” he added.
A key pain point for the Nifty over the last few sessions has been the lack of support from the Nifty Bank. ICICI Bank delivered good numbers over the weekend but the fall in its biggest component HDFC Bank continued to grind the index lower. Even ICICI Bank faced selling pressure at higher levels, ending just 2% lower after having gained as much as 6% at the start of trade.
However, the focal point remains the underperformance of HDFC Bank. India’s largest private lender contributed the most the Nifty fall on Tuesday, resulting in its market capitalisation falling below ₹11 lakh crore. The stock has shed over ₹2 lakh crore in market capitalisation from the ₹12.97 lakh crore peak it made on December 29 last year. More on HDFC Bank here.
The banking index is down over 3,500 points from its recent record high of 48,636.
The Nifty Bank also suggests a “Sell-on-rise” strategy, indicating the prevailing bearish outlook, said Kunal Shah of LKP Securities. Immediate resistance on the upside is at 45,500, with downside support at 45,000 – 44,800. A break below those supports can potentially drag the index down to the 44,000 mark.
““In December I had warned that it will be the banking index that will lead the markets down and it has done exactly that. I have been projecting about 47,000-48,000 levels as a long term resistance. So this has a very good potential as being a medium term turn for the market,” Jai Bala of cashthechaos.com said. He sees near-term support for the index at 43,600. For a longer timeframe, Bala is working with a target of 32,000 on the Nifty Bank.
What Are The F&O Cues Indicating?
These stocks saw short covering despite the market fall on Tuesday, meaning an increase in price but decrease in Open Interest:
| Stock |
Price Change |
OI Change |
| LTIMindtree |
0.09% |
-56.87% |
| Godrej Consumer |
0.36% |
-55.36% |
| ICICI Lombard |
0.12% |
-53.40% |
| Siemens |
0.28% |
-47.30% |
| Cummins India |
0.11% |
-46.41% |
These stocks saw unwinding of long positions on Tuesday, meaning a decrease in both price and Open Interest:
| Stock |
Price Change |
OI Change |
| Astral |
-2.73% |
-39.96% |
| Sun TV |
-6.62% |
-39.20% |
| Bharat Forge |
-2.85% |
-38.88% |
| PFC |
-5.01% |
-38.61% |
| JSW Steel |
-2.50% |
-38.52% |
Here are the stocks to watch out for ahead of Wednesday’s trading session:
Axis Bank: Deposit growth a big highlight in an operationally weak quarter. Net Interest Income and Net Profit in-line with expectations. Total slippages rise sequentially but in-line with estimates. Asset quality is the best in over eight years. Operating profit declines for the first time in six quarters. NIMs at a five-quarter low.
Pidilite: Strong operational beat with overall volume growth of 10.4%. Consumer business volume growth of 10.3% compared to poll of 8% to 10% growth. Gross margin expands by 1,100 basis points to 52.9% from 41.8% year-on-year. Rural and small town markets outpacing urban growth. Commissioned nine new plants in the current year across India.
United Spirits: Revenue in-line with expectations led by the Prestige segment. Strong EBITDA performance at ₹486.5 crore, surpassing estimates of ₹429 crore. EBITDA margin at 16.2% compared to 14.4% poll. Net profit jumps 60% from last year. Volume growth of 4.6% compared to poll estimates of 3% to 5%. Realisations per case up 5.1% from last year.
Havells India: Revenue of ₹4,414 crore below expectations of ₹4,631 crore. EBITDA margin declines by 50 basis points to 9.8%, lower than estimates of 10.4%. Consumer demand continues to remain subdued, according to the management, though the recent trends suggest some recovery. Infrastructure-led demand remains robust
Glenmark Life Sciences: Revenue up 6% to ₹572.8 crore. EBITDA margin expands by 300 basis points to 30.1% from 27%. Generic API business up 6.4% from last year, CDMO business revenue up 27.2% from last year. External business offset by decline in Glenmark Pharma. Regulated market delivered stable growth.
Tata Elxsi: Constant Currency revenue growth of 3% sequentially and 9.4% from last year. Net profit up 6% to ₹206.4 crore. EBIT margin at 26.8% from 27.1% in September.
Sona BLW Precision Forgings: Revenue growth of 15.8% from last year, while EBITDA margin expands by 360 basis points to 29.7%. Increasing its presence in the EV segment. 28% of product revenue share for the first nine months of financial year 2024 is from the EV segment.
Indus Towers: Revenue flat, net profit up 19% from last year, while margin expands by 180 basis points. Impact of ₹2,270 crore due to provision of doubtful debt. Impact of ₹493 crore from an exceptional item. On Vodafone Idea, the company said that it has been paying amount equivalent to monthly billion. Outstanding dues till December 2022 have not been paid. Funding plan of Vodafone Idea has not materialised till date. Total allowances for doubtful receivables with regards to Vodafone Idea are now at ₹5,699 crore.
Aster DM Healthcare: Gets requisite majority of shareholder votes towards the separation of the GCC business from India operations. Resolution to approve sale of GCC business as a related-party transaction gets 99.86% of the eligible votes. Sale of material subsidiary also approved by shareholders with 99.96% votes in favour of the resolution. Company intends to distribute ₹110 – ₹120 as dividend to shareholders. Also plans to boost its India presence by adding 1,500 beds in the next 2-3 years, taking the total capacity to over 6,000 beds.
Lupin: Gets tentative USFDA approval for Rivaroxaban tablets used in preventing blood clots forming due to a certain irregular heartbeat.
UFO Moviez: Enters into an alliance with TSR Films to acquire exclusive advertising rights of TSR’s 403 screens.
First Published: Jan 23, 2024 8:13 PM IST
