Stock market today: The domestic benchmark indices, extended their decline on Wednesday, pressured by elevated crude oil prices and rising global bond yields, which weighed on investor appetite for riskier assets.
The Nifty 50 fell 0.35% to 24,070.65, while the BSE Sensex declined 0.32% to 76,991.33 as of 9:45 IST. The Nifty 50 has now fallen for six consecutive sessions, losing around 1.7% during the period.
Market weakness was broad-based, with 13 of the 16 major sectors trading in negative territory. The broader mid-cap and small-cap indices also declined around 0.5% each.
Sentiment remained under pressure after US President Donald Trump said on Tuesday that no negotiations were underway with Iran and maintained that the Strait of Hormuz remained open, contradicting Tehran’s claim that the key shipping route was closed.
Uncertainty over a potential resolution to the nearly six-month-old Middle East conflict pushed Brent crude towards $92 a barrel, raising concerns over inflation and India’s import costs.
Meanwhile, rising long-term borrowing costs in the US, Germany and Japan have further reduced the appeal of emerging-market equities, as higher risk-free returns in developed markets could encourage investors to shift capital away from riskier assets.
Market Outlook by Jay Thakkar, Vice President & Head of Derivatives and Quant Research, ICICI Securities
Nifty 50
Nifty 50 has once again closed in the negative territory in the last trading session and with that it has closed in the negative territory for the six consecutive days. Since the recent peak made on 3rd August on the day of implementation of CAS, the Nifty 50 has been trending lower and it has reached to the lower end of the overall range which is 24,000-24,600 levels.
For the current series, 24,000 strike has the highest put base, hence that is an immediate support whereas, on several occasions, 24,600 strike has acted as a stiff resistance, hence that is the immediate hurdle.
The Bank Nifty, however, has been outperforming relatively and so is Nifty Midcap and Smallcap, hence the overall trend still appears to be bullish and the ongoing correction seems to be a part of consolidation.
The India VIX too has been trading quite lower despite the recent jump in the international crude oil prices as well as the 30 year US bond yield which has jumped above 5.3% levels post 19 years now. So, the macro data is not much bullish, however, on the domestic front the results season has been better than expected considering the war situation in the Q1 period.
The steps taken by RBI as well as the rates held by US Federal Reserve too helped the equities to trend higher on a positional perspective. From here on, the strong watch should be on 24,000 and 23,500 levels as below these levels, the volatility may increase which could lead to deeper correction, whereas, above 24,600 and 58,500 on Nifty 50 and Bank Nifty respectively, the bulls are likely to dominate the markets.
Stocks To Buy in the near-term – Jay Thakkar
Jay Thakkar of ICICI Securities recommends Bharat Dynamics Futures, Larsen & Toubro (L&T) Futures, and L&T Finance Futures.
Buy Bharat Dynamics Fut in the range of ₹1,400-1,410; stop loss below ₹1,450; Targets R 1,480-1,520
The Nifty Defence Index has been trending higher with many stocks bouncing back initially on account of short covering and lately due to long built up. As far as BDL is concerned, it did witness short covering initially and now witnessing long built up which is a positive sign going ahead. As per the options data, there is no major call base apart from 1,400 strike, thus, above it there is a good upward movement expected in the stock. It has also managed to close above its max pain level of 1,380 which is a positive sign in the near term.
Buy Larsen & Toubro Fut in the range of ₹4,050-4,070; stop loss below ₹3,950; Targets ₹4,200 and ₹4,300
L&T has been consolidating within a range of 4,050-4,150 since past few days and the move prior to it didn’t witness any significant open interest in the futures segment, however, it didn’t even have any significant options positioning as well, instead it has now moved beyond the recent call base of 4,000-4,050 range as well as put additions are witnessed at lower ends, hence the upside potential is higher. The stock is also trading above its max pain level of 4,000 which will now act as a short-term support.
Buy L&T Finance Fut in the range of ₹322-327; stop loss below ₹314; Targets ₹340 and ₹350
L&T Finance has witnessed a strong price action in the last trading session despite the weakness in the overall market. The stock has outperformed the market recently and the strong up move was seen on account of short covering and now the overall positions are quite low for it to correct from hereon, hence further upside cannot be ruled out. The stock is trading well above its max pain of 320 and it has a strong put base at 320.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
