Daily Stock Market Update: Morning Insights – September 10, 2024
In today’s stock market session, the Nifty 50 index gained 84 points, closing at 24,936 after a day of steady upward movement. As we highlighted in our previous reports, the 24,800-24,850 support zone proved to be a key level for the index. The Nifty opened lower and hit its intraday low within the first 15 minutes, only to bounce back off the critical support near the 30-period EMA, which we had marked as a crucial point for market sentiment. This area continues to provide strong technical backing, and we have observed a consolidation pattern within the 24,800 to 25,100 range.
As we mentioned in our morning update, today’s focus would be on sector-specific opportunities, with the broader market likely to remain range-bound. Our call to stay cautious in broader markets turned out to be accurate, as small-cap and mid-cap indices ended in the red, under pressure, further confirming the narrow market participation today. The Nifty 500’s advance-decline ratio stood at 190 advances vs. 308 declines, reaffirming our stance to avoid aggressive positions.
The FMCG and banking sectors emerged as top gainers, aligning with our earlier forecast that select sectors would drive the market higher despite overall consolidation. The Nifty FMCG sector surged to a new high, led by robust performances from stocks like ITC. This rally was no surprise as we had identified strong technical support within FMCG names. On the other hand, banks, which were poised to benefit from improving fundamentals, also contributed to the upward trend.
However, it wasn’t all positive across sectors. As anticipated, the Nifty PSE index continued its underperformance. Consistent with our Dow Theory-based analysis, the index remained in a sell mode, forming lower tops and trading below its key moving averages. We flagged this risk earlier, suggesting that PSE stocks should be avoided, and today’s session reinforced that stance, with the index continuing its downward trajectory.
One sector that stood out in today’s rally was IT, which was on our radar in the morning update. IT stocks led the market charge, driven by strong global cues and gains in heavyweight names like Coforge. This was in line with our prediction that a global pullback could create a favorable environment for export-oriented sectors like IT. Our call to look for stock-specific opportunities within sectors like IT played out well, with several stocks showing significant strength.
Technical Outlook: Consolidation Continues From a technical perspective, the Nifty remains in the consolidation zone that we had highlighted in our previous reports. The 24,800-24,850 support level, based on a confluence of factors like moving averages and trendline support, has held strong. On the upside, the resistance levels are clearly defined at 25,000 and 25,100. A breakout beyond this range will signal the next big move. Until that happens, the market is likely to remain range-bound.
Our advice to traders has been consistent – avoid taking aggressive bets in this consolidation phase. Instead, focus on selective stock picking in sectors that demonstrate relative strength, such as FMCG, IT, and selective banking names. The broader market continues to remain under pressure, as seen with the declines in mid-cap and small-cap indices, and it is crucial to remain cautious in this environment.
Sectoral Overview: FMCG, IT Lead the Way As expected, the FMCG sector remains one of the most resilient in today’s session, with stocks like ITC hitting new highs. The sector has been supported by robust earnings growth and consistent demand across key products. Our early morning analysis pointed out the potential for continued strength in FMCG, and today’s performance reaffirmed that bullish outlook.
The IT sector also played a key role in driving the market higher. Coforge led the rally, and several other IT stocks followed suit, benefiting from positive global cues and the weak Indian rupee, which makes Indian IT services more competitive globally. This sector continues to show strong upward momentum, as we had highlighted earlier in our reports.
In contrast, the Nifty PSE index remained an underperformer, consistent with our forecast. The index remains in a downtrend, making lower highs and trading below its moving averages. We continue to advise avoiding this sector as it shows more downside potential in the near term.
Global Markets & FII Activity Global markets experienced a pullback session yesterday, which provided some positive momentum for the Indian markets today. Foreign Institutional Investors (FIIs) were net buyers, purchasing equities worth ₹1,176.55 crore. Domestic Institutional Investors (DIIs) also contributed significantly with net buying of ₹1,757.02 crore. This liquidity infusion helped lift the market despite a somewhat mixed performance across broader indices.
Conclusion: Range-Bound Market, Selective Approach Recommended In conclusion, today’s market action was in line with our morning forecast. The Nifty 50 continues to trade in a tight 24,800-25,100 range, with strong support at the lower end of this zone. We maintain our view that the market is in a consolidation phase, and traders should stay selective with stock-specific opportunities. Sectors like FMCG, IT, and banking remain promising, while PSE and broader market indices continue to struggle. Patience and careful stock selection are key in this environment.
Key Levels to Watch:
- Nifty Support: 24,850, 24,750
- Nifty Resistance: 25,000, 25,100
- Bank Nifty Support: 50,800, 50,570
- Bank Nifty Resistance: 51,250, 51,500
