Bears make a comeback; Nifty ends below 11,600

After three straight days of gains, bears took charge on Dalal Street, pushing Nifty below its crucial support level of 11,600 towards the close of the session on July 18.

Trade war concerns led to a fall in US markets on July 17 while muted results from India Inc were a dampener for domestic investors.

“Global central banks, including RBI, are cutting their rates to support the economy, however markets is not yet convinced given the weak demand scenario, extension in the trade war and lack of revival in corporate earnings. FIIs are on a risk-off mode, while domestic mutual funds are providing marginal support in the market. On a one-year-forward basis, the market is trading at a P/E of 19x, which is at a premium. It remains to be seen whether or not this premium valuation will sustain,” said Vinod Nair, Head of Research, Geojit Financial Services Ltd.

Foreign institutional investors have been net sellers in the equity segment of Indian markets, pulling out more than Rs 4,000 crore till now in July, SEBI data showed.

Sensex gave up 39,000 as the index fell by more than 300 points while Nifty saw a dip of nearly 100 points.

The final tally on D-Street – Sensex fell 318 points to 38,897 while Nifty closed 90 points lower at 11,596.

The broader market underperformed as the S&P BSE Midcap index plunged 1.2 percent while the S&P BSE Smallcap index closed with losses of 1.15 percent.

More than 300 stocks hit fresh 52-week low which include names like Bosch, Maruti Suzuki, HEG, MindTree, M&M, YES Bank, Cox & Kings, and Reliance Poweretc. Among others.

Top gainers on Nifty include stocks like Wipro, HDFC, ZEE Entertainment, and Britannia Industries. On the losing front, YES Bank fell 12 percent, followed by ONGC and Tata Motors which were down by more than 4 percent each.

Technically, Nifty formed a bearish candle which resembles a bearish belt hold kind of pattern on the daily charts. The resistance is placed at 11700 while a close below 100-days moving average placed at 11,560 could extend the decline towards 11461, said experts.

Stocks in News

Nifty PSU Bank index ended over 3 percent lower on July 18 as earnings so far announced indicated that asset quality concerns may not have over yet. Bank of Baroda, Canara Bank, Bank of India, Union Bank, PNB, IDBI Bank, SBI, Oriental Bank, Syndicate Bank and Indian Bank were down 2-4 percent.

CARE Ratings shares fell nearly 5 percent after the company sent its Managing Director and Chief Executive Officer Rajesh Mokashi on leave after Securities and Exchange Board of India (SEBI) received an anonymous complaint.

Mindtree ended more than 8 percent lower to hit a fresh 52-week low after the midcap IT company disappointed the Street by reporting more than 50 percent sequential fall in profit and operating income for the June quarter. Most global brokerage firms maintained their rating on Mindtree but slashed target price post June quarter results.

Wipro shares rallied over 3 percent despite global brokerages remained bearish on the stock and slashed price target after subdued growth in Q1FY20, as operating profit margin in Q1 beat analyst estimates.

YES Bank plunged over 12 percent on July 18 and hit a fresh 5-year low as net profit of the private lender plunged 91 percent year-on-year (YoY) weighed down by a three-fold increase in provisions and weak asset quality.

Global update

Stocks in Japan were the biggest losers among major markets in the region on Thursday, with the other Asian bourses following suit, amid a renewed threat to trade. Nikkei dropped 1.97 percent to close at 21,046.24. The Topix fell 2.11 percent to end its trading day at 1,534.27.

Shanghai composite declining 1.04 percent to 2,901.18 and the Shenzhen component down 1.58 percent to 9,154.65. The Shenzhen Composite also fell 1.633 percent to 1,548.64. Hang Seng declined 0.66 percent while Kospi declined 0.31 percent to close at 2,066.55.