Stock Market Update: Today Nifty 50 Snaps Losing Streak: A Technical Analysis of the Market’s Rebound

Indian stock market experienced a notable rebound, with the benchmark indices, the Sensex and Nifty 50, closing significantly higher. The Sensex ended the day at 81,560, marking an increase of 376 points or 0.46%, while the Nifty 50 gained 84 points, or 0.34%, to finish at 24,936.40. This positive momentum was largely fueled by strong performances from key banking and FMCG stocks, including ICICI Bank, HDFC Bank, ITC, and Hindustan Unilever (HUL).

Market Overview

Key Contributors to Market Gains

The rise in the Indian stock market can be attributed to value buying in heavyweight stocks after a recent correction. Investors showed optimism as they selectively picked quality stocks, driven by the medium to long-term positive outlook for the Indian economy.

• Banking Sector: The Nifty Bank index rose by 1.07%, with ICICI Bank increasing by 2.09% and HDFC Bank contributing significantly to the gains.
• FMCG Stocks: The Nifty FMCG index surged by 2.04%, led by HUL, which saw an increase of 2.85%, and ITC, which rose by 1.95%.

Despite the overall positive performance of the benchmark indices, the midcap and small-cap segments faced challenges. The BSE Midcap index fell by 0.28%, and the Smallcap index dropped by 0.65%, indicating a mixed sentiment among investors.

Global Cues and Economic Indicators

The Indian market’s positive performance came amid mixed global cues. Asian markets showed declines, with Japan’s Nikkei 225 dropping over 3% due to concerns about the US economy and speculation regarding the Federal Reserve’s interest rate decisions.

Investors are closely monitoring the upcoming US inflation data, with the Consumer Price Index (CPI) set to be released on Wednesday, followed by the Producer Price Index (PPI) on Thursday. The Federal Reserve’s monetary policy meeting is scheduled for September 17-18, where a potential rate cut is anticipated.

According to the CME FedWatch Tool, traders are currently pricing in a 69% chance of a 25-basis-point cut and a 31% chance of a 50-basis-point reduction. Experts suggest that the market is trying to stabilize amid fears of a recession in the US, with the upcoming inflation data playing a crucial role in shaping investor sentiment.

Technical Analysis

Nifty 50 Technical Outlook

Technical analysts have observed that the Nifty 50 formed a small bullish candle on daily charts, indicating a potential continuation of the pullback formation. Shrikant Chouhan from Kotak Securities noted that as long as the Nifty trades above the 20-day Simple Moving Average (SMA) at 24,800, the upward trend could persist, with targets set at 25,000 and 25,125.

Conversely, if the index falls below 24,800, it may indicate vulnerability in the uptrend. Rupak De from LKP Securities emphasized that the Nifty 50 remains in a “sell-on-rise” mode as long as it stays below 25,100, suggesting that the 25,000-25,100 range could act as crucial resistance.

Sector Performance

While the banking and FMCG sectors led the gains, most other sectors ended in the red. Notably, the PSU Bank index fell by 0.20%, reflecting the cautious sentiment prevailing in the market.

• Top Gainers: HUL (+2.85%), Shriram Finance (+2.30%), ICICI Bank (+2.09%), ITC (+1.95%), and Britannia (+1.74%).
• Top Losers: ONGC (-2.91%), Tech Mahindra (-2.48%), BPCL (-1.19%), Tata Steel (-1.14%), and Hindalco (-1.06%).

Investor Sentiment

Investor sentiment appears to be cautiously optimistic, with many looking for opportunities in quality stocks amid the backdrop of potential rate cuts and ongoing economic uncertainties. Prashanth Tapse, Senior VP (Research) at Mehta Equities, noted that the market rebounded after four consecutive sessions of losses, driven by buying in banking stocks. However, the overall undertone remains cautious as uncertainty looms over the US Fed’s rate cut decisions later this month.

Disclaimer: The information given in this article is from investment experts and brokerage companies, they do not represent Local Haryana. Before taking any investment related decision, you must consult a certified expert.