Nifty fails to hold above 11,500; tread cautiously

Bulls failed to retain control of D-Street on July 10 as Nifty failed to hold on to 11,500 on a closing basis while Sensex fell nearly 200 points in volatile trade.

The final tally on D-Street – Sensex fell 173 points to 38,557 while Nifty closed 57 points down at 11,498. The index closed below 100-day exponential moving average (EMA) placed around 11,500.

The next big support for Nifty50 is now placed at 11,316, which is 200-day EMA. Experts advise investors to trade cautiously and wait for clear signs of a breakout for initiating long positions.

In terms of sectors, the S&P BSE Capital Goods index lost 1.6 percent followed by the S&P BSE Realty index that plunged 1.5 percent, and the S&P BSE metal index that was down 1.2 percent.

The broader market underperformed as the S&P BSE Midcap index and the S&P BSE Smallcap index slipped 0.75 percent each.

“Consolidation continued as weak auto sales have dimmed growth expectation while a surge in oil prices further has affected the sentiment,” Vinod Nair, Head of Research, Geojit Financial Services Ltd told .

“Focus remains on the earnings season where the preliminary subdued results in IT stocks have triggered a gradual downgrade in earnings expectation,” he said.

IT stocks remained under pressure after TCS reported results for the quarter ended June which was slightly below expectations.

Reacting to the results, Credit Suisse and CLSA maintained their rating but reduced their target price on TCS. The stock closed 1.1 percent lower at Rs 2,107.

In terms of technicals, Nifty formed a bearish candle but it closed above July 9 intraday low of 11,461 that suggests there is a possibility of a pullback. If the index breaks below this level then the selling pressure could extend towards 11,420-11,300, while a close above 11,600 could bull back in charge.

“For time being traders should remain neutral on the index and wait for some signs of strength which can be established on a close above 11,600,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, told .

Stocks in News

Shares of InterGlobe Aviation, the operator of airline IndiGo, ended over 11 percent down on July 10 after differences between two promoters Rahul Bhatia and Rakesh Gangwal reached the market regulator.

Tata Motors shares ended over 2 percent lower on July 10 after Jaguar Land Rover reported double-digit fall in June sales.

Bajaj Finance shares closed over 5 percent lower as Morgan Stanley said it sees 18 percent downside from current levels despite strong loan growth in Q1. The brokerage has ‘equalweight’ rating on the stock with a target price at Rs 2,950 per share after the company reported AUM growth of 41 percent YoY in Q1, the same as the last quarter.

Shares of Indian Acrylics ended 10 percent higher on July 10 after reporting stellar earnings performance for the quarter ended June 2019. The acrylic fibre manufacturer said its net profit in the quarter ended June 2019 jumped to Rs 10.5 crore compared to Rs 3.5 crore in the same period last fiscal.

Yes Bank shares gained close to 2 percent even as global investment firm Jefferies turned bearish on the stock, citing liquidity concerns. The brokerage has ‘underperform’ rating on the stock and it has slashed target price by nearly half to Rs 80 from Rs 155 earlier, implying 12 percent downside from current levels.

Global update

Shanghai composite closed 0.44 percent lower to 2,915.30, Shenzhen component 0.35 percent to 9,166.15 and Shenzhen composite 0.465 percent lower to 1,550.87.

Hang Seng added 0.32 percent. MSCI’s broadest index of Asia-Pacific shares outside Japan also rose 0.31 percent. Kospi advanced 0.33 percent to close at 2,058.78.

The S&P/ASX 200 gained 0.36 percent to finish its trading day at 6,689.80. Nikkei slipped 0.15 percent to close at 21,533.48 and the Topix fell 0.23 percent at 1,571.32.