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The Indian equity market experienced a downturn on Wednesday, primarily influenced by a significant drop in ITC shares following reports of a potential stake sale. Despite positive global cues that generally buoyed market sentiment, the domestic indices remained range-bound, ultimately closing in the red. The BSE Sensex fell by 239.31 points, or 0.29%, to settle at 81,312.32, while the NSE Nifty declined by 73.75 points, or 0.30%, to close at 24,752.45. This performance reflects a cautious approach from investors, who are weighing various domestic and international factors that could impact market direction. The absence of strong support from Foreign Institutional Investors (FIIs) and concerns about prevailing premium valuations are contributing to the negative bias, according to market analysts. The looming concern over India-U.S. trade relations, particularly following the conclusion of the 90-day pause period, adds another layer of uncertainty, posing an external risk to the market's stability. Despite these headwinds, there are positive aspects to consider. Improved monsoon forecasts, a benign inflation outlook, and expectations of a stronger Q4 GDP offer potential cushions against downside risks. However, a crucial element for sustained market stability is the improvement of earnings visibility, aligning with the macroeconomic improvements. This alignment is essential for reinforcing investor confidence and ensuring a more robust market trajectory. Globally, Wall Street's main indexes exhibited subdued performance on Wednesday, following a significant rally triggered by easing trade tensions in the previous session. Investors are keenly awaiting Nvidia's earnings report and the release of the U.S. Federal Reserve's last policy meeting minutes. Nvidia's anticipated surge in first-quarter revenue, projected at 66.2% based on LSEG data, has generated considerable anticipation. The company's shares experienced a slight increase of 0.2% in anticipation of the earnings release, which is expected after market close. The options market is reflecting this uncertainty, with traders preparing for potential industry-wide volatility. Defensive options contracts are attracting significant attention, particularly for the VanEck Semiconductor ETF, which is the largest semiconductor ETF. This heightened activity in defensive options suggests a cautious sentiment among investors, who are seeking to hedge against potential downside risks in the semiconductor sector. In Europe, the main stock index closed lower amid broader declines on Wednesday, as investors carefully monitored developments in trade negotiations with the United States and assessed various economic data releases from the region. The continent-wide STOXX 600 index experienced a decrease of 0.6% on the day, following two consecutive sessions of gains that were spurred by the U.S. President Donald Trump's decision to delay tariffs on the European Union. Recent reports indicate that EU policymakers have requested leading companies in the region to provide details of their U.S. investment plans. German automakers, including BMW, Mercedes-Benz, and Volkswagen, are reportedly engaged in discussions with Washington regarding a potential import tariff deal. These negotiations reflect the ongoing efforts to navigate complex trade dynamics and mitigate potential disruptions to international commerce. From a technical analysis perspective, the Nifty index spent another day in consolidation, remaining largely range-bound ahead of the monthly expiry. On the hourly chart, the index has slipped below the critical 21-EMA and 50-EMA, indicating a weakening trend in the near term. Immediate support is identified at 24,700; a sustained move below this level could potentially trigger further selling pressure. Significant put writing at 24,700 reinforces this technical setup. On the higher end, notable call writing is observed at 24,800. A decisive move above 24,800 could potentially force call writers to cover their positions at the 24,800 CE, which could trigger a sharp rally in the market. The article also provides insights into the most active stocks on BSE in value terms, including ITC, Life Insurance Corporation, IFCI, HDFC Bank, Bharat Dynamics, Mazagon Dock Shipbuilders, and GRSE. Higher activity in value terms helps identify counters with the highest trading turnovers in the day. The most actively traded stocks in volume terms on NSE include Vodafone Idea, ITC, IFCI, Suzlon Energy, Sagility India, Reliance Power, and YES Bank. Stocks such as IFCI, Techno Electric, Schneider, ITI Ltd, MMTC, Life Insurance Corporation, and Alok Industries witnessed strong buying interest from market participants. Over 98 stocks reached their 52-week highs, while 32 stocks slipped to their 52-week lows. Stocks experiencing significant selling pressure included Escorts Kubota, Action Construction Equipment, Gujarat Fluorochemicals, Sundaram Finance, 3M India, Kirloskar Brothers, and Aurobindo Pharma. Overall, market sentiment was neutral, with 1,928 stocks declining, 2,022 stocks advancing, and 156 stocks remaining unchanged out of the 4,106 stocks that traded on the BSE on Wednesday. This mixed performance indicates a market grappling with various factors, both positive and negative, as investors await further clarity on earnings, trade relations, and economic indicators. The anticipation surrounding Nvidia's earnings and the Federal Reserve's policy meeting minutes further contribute to the cautious atmosphere, as investors seek clues about the future direction of the market. In addition to these factors, the article also touches upon the broader context of global trade negotiations and economic data releases. The discussions between German automakers and Washington regarding potential import tariffs highlight the complexities of international trade relations and the potential impact on various industries. The monitoring of economic data from the region also underscores the importance of economic indicators in shaping market sentiment and investment decisions. The article also mentions that the domestic indices remained rangebound with a negative bias due to the lack of support from FIIs and prevailing premium valuations. A lingering concern over India-U.S. trade relations continues to pose an external risk. Key economic indicators such as an improved monsoon forecast, a benign inflation outlook, and expectations of a stronger Q4 GDP may help cushion downside risks. However, earnings visibility needs to improve in tandem with the macros, which is vital for stability in the direction. Wall Street's main indexes were subdued on Wednesday after a sharp rally in the previous session sparked by easing trade tensions, as investors awaited AI leader Nvidia's results and minutes from the U.S. Federal Reserve's last policy meeting. Traders in the options markets are bracing for industry-wide volatility, with defensive options contracts drawing heavy attention for the VanEck Semiconductor ETF, the largest semiconductor ETF. Europe's main stock index closed lower amid broader declines on Wednesday as investors monitored progress in trade negotiations with the United States and assessed a slate of economic data from the region. The Nifty spent another day in consolidation, with the index remaining largely range-bound ahead of the monthly expiry. On the hourly chart, the index has slipped below the critical 21-EMA and 50-EMA, indicating a weakening trend in the near term. Immediate support is seen at 24,700; a sustained move below this level could trigger further selling pressure. Significant put writing at 24,700 reinforces the technical setup. On the higher end, notable call writing is observed at 24,800. A decisive move above 24,800 could force call writers to cover their positions at the 24,800 CE, potentially triggering a sharp rally in the market.
Source: Ahead of Market: 10 things that will decide stock market action on Thursday