SGX Nifty Indicates a Negative Opening; Another Volatile Session Likely Due to Monthly Expiry

Global stock markets: Dow 30, -1.9%; S&P, -2.4%; Nasdaq, -3.0%; Nikkei, -0.6%; Hang Seng, -1.5%; KOSPI, -1.8%

Yesterday, Nifty, after a gap-up opening, managed to hold it in the first half of the session. Selling pressure intensified in the second half, with Nifty dropping more than 200 points from its intraday high. However, there was a good recovery in the last hour, helping Nifty close 100 points off lows. Volume was higher compared with the previous session. On Tuesday, we moved the market to a Downtrend as Nifty breached its 50-DMA, the distribution day count remained elevated at seven, and many leading stocks failed to hold logical support levels.

On the sectoral front, Nifty Realty (+0.8%) was the top performer. Nifty Bank, Financial Services, FMCG, and Auto closed flat or with small gains. Nifty Pharma (-1.6%) and PSU Banks (-1.4%) were the top decliners. The advance-decline ratio was leaned toward decliners. Of 2,204 stocks traded, 854 advanced, 986 declined, and the rest remained unchanged.

Under this market conjuncture, investors should remain on the sidelines and avoid taking any fresh exposure. Further, investors already with positions open should trim their market exposure and raise cash if possible. They should wait for the market to show credible signs of recovery and in the meantime, keep a watch on the stocks that are showing resilience under falling market scenarios. Looking forward, we will shift the market to a Rally Attempt if Nifty establishes a bottom and stays above yesterday’s low (11,025) for three straight sessions. From there, we would prefer to see a follow-through day before shifting the market back to a Confirmed Uptrend. Should this occur, the focus will be on ideas that show the best relative strength with good accumulation.

Key News

Housing Development Fin. will raise up to Rs 5,000 crore through the issuance of bonds on private placement. The bonds will offer a coupon rate of 6.43%, payable annually on September 29 every year.

The government has extended Uday Kotak’s term as the chairman of bankrupt non-banking finance company IL&FS for a year. This is the second extension after the government extended the term for a year in the last year.

O’Neil Market Condition Report

For the 24 emerging markets tracked by our institutional research team, the market status breakdown is as follows: Confirmed Uptrend, 12%; Rally Attempt, 0%; Uptrend Under Pressure, 72%; Downtrend, 16%.

For the 24 developed markets tracked by our institutional research team, the market status breakdown is as follows: Confirmed Uptrend, 4%; Rally Attempt, 4%; Uptrend Under Pressure, 68%; Downtrend, 24%.

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