Fear of spike in bad loans leads to profit taking; Nifty holds 11,100

Weak global cues, a rise in coronavirus cases and worries ove a surge in bad loans in 2020 led to profit booking on D-Street. The S&P BSE Sensex fell nearly 200 points to close below 38,000 while the Nifty50 managed to hold on to 11,100.

The S&P BSE Sensex fell 194 points to 37,934 while the Nifty50 closed 62 points lower at 11,131.

“Indian benchmark indices ended a volatile day in the red, following negative global cues and domestic uncertainties. Global markets were impacted due to rising US-China tensions and the suspected second wave of virus infections,” Vinod Nair, Head of Research at Geojit Financial Services said.

“Financials led the losses following an RBI report, which expects a surge in bad loans this year. A record number of virus infections in India also added to the uncertainty. Investors are advised to remain stock-specific and keep accumulating only quality stocks in this scenario,” he said.

Sectorally, the action was seen in IT, metals, and oil & gas stocks, while selling pressure was visible in banks, finance, realty and healthcare stocks.

The broader markets underperformed the indices. The S&P BSE Midcap index fell 1 percent while the S&P BSE Smallcap index was down 0.98 percent.

Top Nifty gainers included TCS, BPCL, Infosys and Asian Paints.

Top Nifty losers included HDFC Bank, ZEE Entertainment and ICICI Bank.

Stocks & Sectors

Sectorally, the S&P BSE IT index rose 2.3 percent followed by the S&P BSE Metals index, which was up 0.4 percent, and the S&P BSE Energy index closed with gains of 0.38 percent.

Profit-taking was visible in the S&P BSE Bankex that fell 3.5 percent. The S&P BSE Finance index was down 2.4 percent and the S&P BSE Realty index closed with losses of 1.7 percent.

Volume spike of more than 100 percent was seen in stocks like Equitas, Sun TV, Idea and M&M Financial Services.

Long buildup was seen in stocks like ICICI Pru, JSPL and Bajaj Auto.

Short buildup was seen in stocks like Cipla, Escorts and Aurobindo Pharma.

L&T Infotech, RIL, Navin Fluorine and Arti Drugs were among 100 stocks on the BSE to hit their fresh 52-week high.

Stocks in news

Kotak Mahindra Bank stock was down over 2 percent after the private lender reported an 8.5 percent year-on-year (YoY) decline in standalone net profit for the quarter ended June 2020, dented by higher provisions, primarily with respect to COVID-19, and lower other income.

Biocon stock fell over 3 percent after the health ministry decided not to include Itolizumab drug in clinical management protocols for treating COVID-19 even though the DCGI approved its “restricted emergency use” in infected patients, sources said.

HDFC Bank share price fell over 3 percent on reports that managing director Aditya Puri has sold bank’s shares worth Rs 843 crore after July 21.

ICICI Bank stock was down 6 percent after the private lender reported Q1 FY21 profit at Rs 2,599.1 crore, a growth of 36.2 percent year-on-year backed by some stake sale in general and life insurance subsidiaries.

Asian Paints stock price jumped over 3 percent after the company reported a 66.7 percent year-on-year decline in net profit at Rs 218.45 crore in the June quarter but overall earnings beat analyst estimates on business improvement in June.

Technical View

The Nifty formed a bearish candle on the daily charts, which also resembled a Bearish Belt Hold pattern

It bounced back from its 5-Days EMA placed at 11,122.

The index has been consolidating between 11050 and 11240 for the past five trading sessions in which declines were being bought while follow-up was missing.

“It requires a decisive range breakout for the next leg of the rally. Now it has to continue to hold above 11,050 to extend its move towards 11,240 then 11,333 and 11,500 zones while on the downside key support exists at 11,000 levels,” Chandan Taparia of Motilal Oswal Financial Services Ltd said.

Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd. 

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