Bulls hope for recovery as bears stay strong; foreign sales persist

The market continues to exhibit bearish sentiment, with a reluctance to shift direction. Anticipations for second-quarter results from companies are not particularly optimistic, and foreign investors selling off assets to move to China could further depress the market. Additionally, rising retail price inflation is weighing on market sentiment. However, bulls are hopeful for a turnaround today, buoyed by the recent rally in US markets over the weekend.

The price hike for retail goods will be announced this evening. Over the past two months, retail inflation has remained below 4%, but projections indicate it may approach 5% for September, largely due to surging prices of staples like onions, tomatoes, and potatoes. This uptick is also attributed to significantly lower inflation rates during the same month last year.

Prominent companies, including Reliance and Infosys, are set to release their second-quarter results this week. Reliance and HCL will disclose their figures today, followed by HDFC Life and HDFC AMC tomorrow. Bajaj Auto and South Indian Bank will report on Wednesday, with Infosys, Wipro, Nestlé, CEAT, Geojit, Dhanalakshmi Bank, Havells, Tata Chemicals, and others presenting their results on Thursday. HDFC Bank and Tech Mahindra will round out the week with announcements on Saturday. Reports suggest that Vipra may announce a bonus issue this week.

In the derivatives market, the gift Nifty closed at 25,140 on Friday but has dipped to 25,085 today, suggesting that the Indian market might open with a slight gain.

European markets closed higher on Friday, bolstered by a 0.2% rise in UK GDP for August, following stagnation in June and July.

Lower-than-expected headline inflation in the US has sparked optimism that the economy may avoid a recession while keeping inflation in check. This, along with positive expectations for bank performance and upcoming second-quarter results, has fueled market gains. JPMorgan Chase climbed 4.4%, while Wells Fargo rose 5.6%. The Dow Jones and S&P both achieved record highs.

On Friday, the Dow Jones Industrial Average surged by 409.74 points (0.97%) to close at 42,863.86. The S&P gained 34.98 points (0.61%) to finish at 5815.03, while the Nasdaq rose 60.89 points (0.33%) to close at 18,342.05. The US market has now registered gains for five consecutive weeks, with the Dow and S&P both up 1.1% for the week, and the Nasdaq rising by 1.2%.

US futures are showing slight losses this morning, with the Dow down 0.02%, the S&P down 0.06%, and the Nasdaq down 0.16%.

The yield on US 10-year Treasury notes stands at 4.096%.

Asian markets are exhibiting mixed performance today. The Japanese market is on holiday, while the Chinese market initially showed gains. However, the Hong Kong market has declined by about 1% as foreign investors expressed disappointment over the lack of additional stimulus from China.

On Friday, the Indian market opened lower before fluctuating, ultimately closing with minor losses. Sectors such as banking, finance, automotive, and real estate experienced declines, while pharmaceuticals, healthcare, metals, and IT stocks saw gains. Mid-cap and small-cap stocks also rose.

Foreign investors sold off a net ₹4,162.66 crore in the cash market on Friday, bringing their total sales for the month to ₹58,394.56 crore over the past eight days. Domestic funds and institutions, however, made net purchases of ₹3,730.87 crore.

On Friday, 1,480 shares advanced while 1,289 shares declined on the NSE. The BSE recorded 2,068 rising stocks against 1,840 falling stocks.

The Sensex closed down 230.05 points (0.28%) at 81,381.36, while the Nifty fell by 34.20 points (0.14%) to finish at 24,964.25. The Bank Nifty declined by 358.60 points (0.70%) to end at 51,172.30.

The mid-cap index gained 0.47% to close at 59,212.70, and the small-cap index rose 0.58% to finish at 19,008.80.

Shares of Sudarshan Chemicals soared by 20% on Friday after the company signed an agreement to acquire the Heubach pigment unit for ₹1,200 crore. Bandhan Bank shares rose 12% after the Reserve Bank approved the appointment of a new MD, with several brokerages raising their target prices.

Despite ongoing selling pressure, bulls enter this week with a sense of optimism. However, the market may only bounce back if it decisively crosses the 25,050 level. The initial challenge will be to maintain support at 24,900.

Technical levels for Nifty:
- Support: 24,930 and 24,900
- Resistance: 25,010 and 25,040

Commodity overview

Gold prices surged to record highs, closing at $2,657.70 an ounce on Friday, an increase of 1%. The price dipped to $2,648 this morning. In Kerala, gold prices rose by ₹560 on Friday and by ₹200 on Saturday, reaching a new record of ₹56,960.

Silver prices increased to $31.15 an ounce.

The dollar is strengthening on expectations that interest rate cuts will be gradual, with the dollar index closing at 102.89 on Friday and rising to 103.04 this morning. The Indian rupee depreciated sharply on Friday, with the dollar crossing ₹84 for the first time, closing at ₹84.06. The rupee is likely to weaken further today due to rising crude oil prices and foreign investor withdrawals.

Crude oil prices fell by more than 0.5% this morning after the hurricane in the US passed without damaging oil storage facilities and refineries. Brent crude rose 3.5% to close at $79.40 on Friday but has dropped to $77.76 today. WTI crude is at $74.31, and UAE's Murban crude is priced at $77.72.

Cryptocurrency update:

Cryptocurrencies are experiencing fluctuations, with Bitcoin rising above $63,000 before falling below $62,700 this morning, while Ether remains above $2,460.

Industrial metals on focus

Industrial metals rallied on Friday in anticipation of potential stimulus from China. Copper rose 0.94% to $9,596.50 a tonne, and aluminium jumped 3.21% to $2,632.42 a tonne. Other metals like lead, nickel, tin, and zinc also saw gains. However, prices are declining this morning on China’s Dalian Commodities Exchange due to the lack of detailed stimulus announcements from the Chinese finance minister.

Market Signals (as of October 11, 2024, Friday)

- Sensex 30: 81,381.36 (-0.28%)
- Nifty50: 24,964.25 (-0.14%)
- Bank Nifty: 51,172.30 (-0.70%)
- Mid Cap 100: 59,212.70 (+0.47%)
- Small Cap 100: 19,008.80 (+0.57%)
- Dow Jones 30: 42,863.86 (+0.97%)
- S&P 500: 5815.03 (+0.61%)
- Nasdaq: 18,342.94 (+0.33%)
- Dollar ($): ₹84.06 (+₹0.09)
- Dollar Index: 102.92 (-0.01)
- Gold (oz): $2,657.70 (+$26.80)
- Gold (Pavan): ₹56,960 (+₹200)
- Crude (Brent): $79.04 (-$0.36)