Taking Stock: Sensex, Nifty down for third session amid global concerns

India’s Sensex and Nifty stock indexes continued their downward trend for the third consecutive session following losses in global equities. Factors that contributed to the decline included the threat of higher-for-longer interest rates, tensions in the Middle East, and mixed economic data from China.

China’s GDP growth and fixed assets investment exceeded expectations, but retail sales and industrial output figures fell short.

At the close, the Sensex was down 456.10 points, or 0.62 percent, at 72,943.68, and the Nifty was down 124.60 points, or 0.56 percent, at 22,147.90.

Recent restrictions on foreign investments from Mauritius into India haven’t significantly impacted the markets, although there were some concerns over the treatment of funds from this former major contributor of foreign portfolio investment inflows.

Analysts said concerns are mounting over factors affecting short-term stock buying. The recent scrutiny of money from Mauritius adds to the list.

With Iran’s attack on Israel and the expected retaliation, crude oil prices may surge, influencing investor caution amid expensive valuations. Some suggest waiting for the Indian general election results in June.

While past wars haven’t deterred investor sentiment, the current difference lies in reduced valuation safety margins.

The biggest losers on the Nifty included Infosys, LTIMindtree, IndusInd Bank and Bajaj Finserv, while the gainers were Eicher Motors, Hindustan Unilever, Oil & Natural Gas Corp. Titan Co., and Divi’s Lab.

The Nifty IT index plunged 2.6 percent, the largest decline among sectoral indices, trailed by the Nifty PSU Bank and Nifty Bank indexes, down 1.3 percent and 0.6 percent, respectively.

On the upside, the Nifty Media gained the most, rising 1.57 percent, followed by the Nifty Oil & Gas and the Nifty Pharma, which increased 0.6 percent and 0.4 percent, respectively.

Of 3,933 stocks listed on the BSE, 2,255 advanced, 1,566 declined, and 112 remained unchanged. While 308 stocks hit the upper circuit, 268 were on the lower circuit. Additionally, 170 stocks reached a 52-week high, while 17 touched their 52-week low.

The stock markets are closed on April 17 for Ram Navami.

Outlook for April 18

Vinod Nair, Head of Research, Geojit Financial Services:

The domestic market sustained its consolidation trend for the third consecutive day, amid apprehensions regarding geopolitical tensions and drop in the probability of a rate cut in the short term. Heightened concerns arose following stronger-than-anticipated US retail sales, amplifying the assumption that the US Federal Reserve might delay rate cuts, leading to a notable uptick in the dollar index and US bond yields.

The IT sector saw the most significant decline, primarily due to expectations of earnings being affected by weak discretionary spending in the US and muted domestic Q4 results.

Prashanth Tapse, Senior VP (Research), Mehta Equities:

Markets extended their losing streak for the third straight session on the back of weak global cues as a sharp rise in US bond yields due to rising Middle East tensions made equity markets less attractive and prompted investors to resort to profit taking. Investors fear that the ongoing conflict could fuel buoyancy in crude oil prices and in turn weigh on inflation.

Rupak De, Senior Technical analyst, LKP Securities:

Technically, the trend has weakened as the index fell below the 21EMA. However, following the sharp decline, the index may find short-term support within the 21,930-22,030 band, where previous congestion occurred. Conversely, failure to maintain support at 21,930 could exacerbate panic in the market. On the higher end, resistance for the short term is positioned at 22,400.

Kunal Shah, Senior Technical & Derivative analyst, LKP Securities:

The Bank Nifty index, after a shaky start, witnessed a recovery in the latter half of the session and managed to close above its 20-day moving average (20DMA), which is situated at 47,500. If the index sustains above the 47,500-47,400 range, it could go towards the 48,000 level. However, a break below 47,300 on a closing basis might trigger further selling pressure, potentially driving the index down towards the 46,500 level.

Aditya Gaggar, Director of Progressive Shares:

There was no relief for the bulls as the index commenced the session lower but as the day progressed, a relief rally was seen. However, another round of selling dragged the index further lower but towards the end, heavyweights came to the rescue and it settled at 22,147.90 with a loss of 124.60 points.

With a gain of over 1.50 percent, the Nifty Media index was the top gainer among the sectors, followed by pharma, while the IT and PSU Banking counters fell.

A quick recovery from lower levels helped the Midcap and Smallcap indexes to outperform the Nifty 50. A reversal can be expected as the index has formed a Spinning Top candlestick pattern at its long-term trendline support, which is coupled with a 50DMA. The psychological level of 22,000 is the immediate support, while the upside seems to be capped at 22,400.

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